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Buy, Borrow, Die – Explained

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Re: Buy, Borrow, Die – Explained

#91

Post by o11c »

ashkankiani wrote: post #86
pmichaud wrote: post #74

Earlier quoted context omitted.

Maybe there's just no good solution here, but I think the original inspiration for this sort of law was about family homes. It's one thing to inherit stocks and have to sell some of them off, but it's much more complex to try to pass down a property that can't be arbitrarily subdivided. There are various options obviously, but I think enough people had to sell their beloved childhood home because of the tax obligatio…

Make an exemption for a primary residence. Everything else can go. Stop letting people hoard wealth like dragons.

Is it that common for people to hoard dragons?

Re: Buy, Borrow, Die – Explained

#92

Post by w4 »

yuvadam wrote: post #47

[Meta] is it common to open a subreddit just for a single post like this one?

How odd. This is a rather interesting catch, especially in light of the upcoming tax fight in 2025 with the TCJA and Expanded Child Tax Credit expirations, and the unrealized capitals gains tax proposals.

Given the other comments pointing to the SEO benefits of creating a subreddit just for a single post, it has shades of an effort to seed the information space and shape the narrative in advance of the tax fight by gaming the search results prior to uninformed journalists and legislative aids developing an interest in the topic, many of whom will search Google for background information and context as the tax fight plays out.

Nice catch, and interesting regardless of the motives.

Re: Buy, Borrow, Die – Explained

#93

Post by 9dev »

deepfriedchokes wrote: post #65
adventured wrote: post #60

Earlier quoted context omitted.

There's no source for the claim. Here is all the New Yorker article says: "That lucrative maneuvering is the realm of specialized attorneys, accountants, and money managers, many of whom work for family offices: in-house financial teams that typically include a dozen or so full-time attendants. Family offices, which have roots in nineteenth-century operations that served John D. Rockefeller and a handful of his peers…

Well thank you this makes me feel a tiny bit better, but with strategies like buy, borrow, die, it’s just a matter of time before these rumors become reality.

Don't bother looking for the amount of money Blackrock currently controls then. The big funds are approaching a point where they wield more power than governments, they just don't play it too open. Yet.

Re: Buy, Borrow, Die – Explained

#94

Post by WA »

TrackerFF wrote: post #85

It always puzzled me how tax-adverse some wealthy people are. I'm not talking about the wealthy people that have 100% of their wealth tied up to company (stock) that they operate - but the wealthy people that are just asset-rich, with zero operational duties. Their wealth is handled by wealth managers, they probably don't even know what they own. But minimizing taxes and hoarding wealth is priority number 1.

Plus complaining about "billions of taxes" (absolute, big and scary sounding numbers) and never mentioning the actual tax rate as a percentage of their gains (probably in the low single digits).

Re: Buy, Borrow, Die – Explained

#95

Post by SoftTalker »

TrackerFF wrote: post #85

It always puzzled me how tax-adverse some wealthy people are. I'm not talking about the wealthy people that have 100% of their wealth tied up to company (stock) that they operate - but the wealthy people that are just asset-rich, with zero operational duties. Their wealth is handled by wealth managers, they probably don't even know what they own. But minimizing taxes and hoarding wealth is priority number 1.

Why does this puzzle you? It seems like completely expected behavior to me. Most people try to minimize taxes. Who do you know that gladly pays more than they legally have to pay?

Re: Buy, Borrow, Die – Explained

#96

Post by Veserv »

pmichaud wrote: post #74
bhauer wrote: post #51

Earlier quoted context omitted.

The step-up in cost basis on death is the original sin that underpins the entire debate over unrealized gains. It's disheartening to see so much thought and deliberation going into an obviously toxic idea (taxing unrealized gains) when the obvious solution (removing the cost basis step-up when assets change hands) is being ignored. Inherited wealth is the least earned, so it should be politically palatable to change…

Maybe there's just no good solution here, but I think the original inspiration for this sort of law was about family homes. It's one thing to inherit stocks and have to sell some of them off, but it's much more complex to try to pass down a property that can't be arbitrarily subdivided. There are various options obviously, but I think enough people had to sell their beloved childhood home because of the tax obligatio…

First of all, the estate/gift tax does not kick in until 13 M$, so that already covers that case.

Second, it is irrelevant. The capital gains tax that would be due on a normal step-up in basis during life is independent of the estate tax.

Assume there was no exemption and you bought stocks 20 years ago for 100 K$ that are now worth 1 M$. If you die, then your estate would need to pay estate taxes on 1 M$.

However, if instead you sold it the day before you died, you would need to pay capital gains on 900 K$. Then you pass away with N $ = (1 M$ - taxes) in cash. Your estate would then additionally need to pay estate tax on N $.

The step-up in basis is the difference between these cases. Your inheritors get your capital gains (step-up in basis) tax-free, but you still need to pay the estate tax.

Re: Buy, Borrow, Die – Explained

#97

Post by sangnoir »

ashkankiani wrote: post #86
pmichaud wrote: post #74

Earlier quoted context omitted.

Maybe there's just no good solution here, but I think the original inspiration for this sort of law was about family homes. It's one thing to inherit stocks and have to sell some of them off, but it's much more complex to try to pass down a property that can't be arbitrarily subdivided. There are various options obviously, but I think enough people had to sell their beloved childhood home because of the tax obligatio…

Make an exemption for a primary residence. Everything else can go. Stop letting people hoard wealth like dragons.

Without a cap, overpriced 8- or 9-figure residences will themselves become the vehicle of wealth transfer, rather than irrevocable trusts.

Re: Buy, Borrow, Die – Explained

#98

Post by xboxnolifes »

ohashi wrote: post #84
AnimalMuppet wrote: post #79

Earlier quoted context omitted.

No, but be careful where you draw the line. In particular, don't draw it between "real estate" and "financial assets". Real estate can easily be a financial asset. Instead, the trick is to draw it between "family farm" and "billionaire who bought 100,000 acres of prime farmland".

Seems straight forward enough, put a value cap on it. $10 million? 20 million? Is anyone going to feel bad for the poor soul who can't pay the tax bill on a free 20 million dollar home? We have a limit on gifts and according to this is 13 million. Just make it that. What would be the downside here other than extremely wealthy having to pay some taxes upon death?

Make inheritance count toward the gift limit. Have the full $13M limit left on your gifting exemptions? You pass down $13M in inheritance tax free.

Re: Buy, Borrow, Die – Explained

#99

Post by jongjong »

bhauer wrote: post #51
wmf wrote: post #42

If this is accurate, it finally explains something I've been asking about for years: The loan is paid back after the step-up in basis. That's the loophole. If the loan was paid back before step-up, the estate would still have to pay capital gains tax.

The step-up in cost basis on death is the original sin that underpins the entire debate over unrealized gains. It's disheartening to see so much thought and deliberation going into an obviously toxic idea (taxing unrealized gains) when the obvious solution (removing the cost basis step-up when assets change hands) is being ignored. Inherited wealth is the least earned, so it should be politically palatable to change…

>Inherited wealth is the least earned

Let's be real. No wealth is 'earned'. It's almost entirely luck and social connections. No different from inheritance.

Besides, inheritance can be hard work, psychologically. Your parents may be in a very different socioeconomic group than you for most of your adult life. Your baseline expectation for a 'normal' lifestyle is somewhat elevated (due to the lifestyle you experienced in your childhood) but, for most of your adult reality, you're broke and you feel guilty knowing that your child (the only one you can afford to have) can't have the same childhood that you had.

You work like crazy just to try to earn a living to get back to 'normal' (what you experienced in your childhood) but, deep down, you know you that your best shot at getting there is inheritance in about 30 years' time when you're at death's door (because, with all the stress you experienced, you know you're not going to live as long as your parents). Your biggest worry is that your government will fall to communism and there will be no inheritance.

Your life was basically ruined since the start of adulthood as soon as you were confronted with the ugly reality that labor of any kind is worthless and capital is everything. A reality that your parents will never have to face.

If the government wants to be perfectly consistent and tax people based on how easy it was for them to earn money, then it should impose wealth tax since the amount of wealth tells you the amount of luck and social connectedness at play... And this will also impact inheritance to some extent, but to a fairer extent.

Re: Buy, Borrow, Die – Explained

#100

Post by yccs27 »

pmichaud wrote: post #74
bhauer wrote: post #51

Earlier quoted context omitted.

The step-up in cost basis on death is the original sin that underpins the entire debate over unrealized gains. It's disheartening to see so much thought and deliberation going into an obviously toxic idea (taxing unrealized gains) when the obvious solution (removing the cost basis step-up when assets change hands) is being ignored. Inherited wealth is the least earned, so it should be politically palatable to change…

Maybe there's just no good solution here, but I think the original inspiration for this sort of law was about family homes. It's one thing to inherit stocks and have to sell some of them off, but it's much more complex to try to pass down a property that can't be arbitrarily subdivided. There are various options obviously, but I think enough people had to sell their beloved childhood home because of the tax obligatio…

Isn‘t this a false dichotomy? Removing the cost basis step-up doesn‘t automatically mean any taxes are due on the inheitance - you could just keep the low cost basis and pay the tax once you actually realize your gains.
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