Buy, Borrow, Die. Legally Never pay Taxes.

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WiseOne
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Re: Buy, Borrow, Die. Legally Never pay Taxes.

Post by WiseOne » Thu Jun 17, 2021 1:21 pm

We're not sure what the Biden tax plan is going to be exactly. The article I read didn't mention any income exclusions. The highest cap gains rate, a punishing 40 some odd%, is what would apply to incomes over $1 million. Everyone else would have the cap gains rate abolished in favor of counting cap gains as ordinary income. I'm not sure whether deducting losses would still be a thing, either.

There are a number of Congress members both Democrat or Republican aware of the potential impact on small businesses, but it's not clear whether anything will be done about it. Probably the easiest way to deal with this is to sell on an installment plan, spread over enough years to keep the cap gains rate at a manageable level. That might be viewed as a form of tax evasion, but it's really no different from selling stock shares in different years to minimize the tax hit in a given year, and that's done all the time.
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Re: Buy, Borrow, Die. Legally Never pay Taxes.

Post by Xan » Thu Jun 17, 2021 1:49 pm

WiseOne wrote:
Thu Jun 17, 2021 1:21 pm
We're not sure what the Biden tax plan is going to be exactly. The article I read didn't mention any income exclusions. The highest cap gains rate, a punishing 40 some odd%, is what would apply to incomes over $1 million. Everyone else would have the cap gains rate abolished in favor of counting cap gains as ordinary income. I'm not sure whether deducting losses would still be a thing, either.
Of course we don't know what the final legislation will be, if anything, but do you have a reference for the "everyone else" part? All I've seen is that when your income hits $1 million, your cap gains rate goes to 39.7%. I believe they've been specifically saying that it doesn't affect anyone else at all.
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Re: Buy, Borrow, Die. Legally Never pay Taxes.

Post by WiseOne » Thu Jun 17, 2021 2:05 pm

Xan wrote:
Thu Jun 17, 2021 1:49 pm
WiseOne wrote:
Thu Jun 17, 2021 1:21 pm
We're not sure what the Biden tax plan is going to be exactly. The article I read didn't mention any income exclusions. The highest cap gains rate, a punishing 40 some odd%, is what would apply to incomes over $1 million. Everyone else would have the cap gains rate abolished in favor of counting cap gains as ordinary income. I'm not sure whether deducting losses would still be a thing, either.
Of course we don't know what the final legislation will be, if anything, but do you have a reference for the "everyone else" part? All I've seen is that when your income hits $1 million, your cap gains rate goes to 39.7%. I believe they've been specifically saying that it doesn't affect anyone else at all.
The first articles that came out about it were very clear that Biden intended to impose a 43.4% cap gains rate on incomes > $1 million, but articles have been much fuzzier about what happens to incomes below that threshold since....so I thought some evolution was happening. Will keep an eye on it for sure - and definitely hope you're right.

BTW this is really going to hurt not only small business owners, but long time homeowners with a house to sell in an expensive market - especially if that $1 million cap is fixed. Fixed caps always have a way of descending down the ranks to hit the less wealthy.
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Re: Buy, Borrow, Die. Legally Never pay Taxes.

Post by Xan » Thu Jun 17, 2021 2:12 pm

WiseOne wrote:
Thu Jun 17, 2021 2:05 pm
Xan wrote:
Thu Jun 17, 2021 1:49 pm
WiseOne wrote:
Thu Jun 17, 2021 1:21 pm
We're not sure what the Biden tax plan is going to be exactly. The article I read didn't mention any income exclusions. The highest cap gains rate, a punishing 40 some odd%, is what would apply to incomes over $1 million. Everyone else would have the cap gains rate abolished in favor of counting cap gains as ordinary income. I'm not sure whether deducting losses would still be a thing, either.
Of course we don't know what the final legislation will be, if anything, but do you have a reference for the "everyone else" part? All I've seen is that when your income hits $1 million, your cap gains rate goes to 39.7%. I believe they've been specifically saying that it doesn't affect anyone else at all.
The first articles that came out about it were very clear that Biden intended to impose a 43.4% cap gains rate on incomes > $1 million, but articles have been much fuzzier about what happens to incomes below that threshold since....so I thought some evolution was happening. Will keep an eye on it for sure - and definitely hope you're right.

BTW this is really going to hurt not only small business owners, but long time homeowners with a house to sell in an expensive market - especially if that $1 million cap is fixed. Fixed caps always have a way of descending down the ranks to hit the less wealthy.
hmm, definitely something to keep an eye on. And yes, if that cap isn't indexed to inflation, then there's a fairly naked intention for it to apply to more and more people down the road.
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Re: Buy, Borrow, Die. Legally Never pay Taxes.

Post by ahhrunforthehills » Thu Jun 17, 2021 3:12 pm

Mark,

Since it appears that you like to travel, have you considered puerto rico's Act 60? Just put in your 183 days each year and spend the rest of your time travelling somewhere else. They even lower the number of days if there is a disaster that strikes.

Assuming the PR government doesn't screw you and change the rules, it is the best tax deal I have come across. They are even finishing up a private hospital in Dorado Beach for the wealthy gringos. The kicker is that basically all of puerto rico is a declared Opportunity Zone.

Edit: I assume above that you are either retired or already work remotely.
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Mark Leavy
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Re: Buy, Borrow, Die. Legally Never pay Taxes.

Post by Mark Leavy » Thu Jun 17, 2021 3:21 pm

ahhrunforthehills wrote:
Thu Jun 17, 2021 3:12 pm
Mark,

Since it appears that you like to travel, have you considered puerto rico's Act 60? Just put in your 183 days each year and spend the rest of your time travelling somewhere else. They even lower the number of days if there is a disaster that strikes.

Assuming the PR government doesn't screw you and change the rules, it is the best tax deal I have come across. They are even finishing up a private hospital in Dorado Beach for the wealthy gringos. The kicker is that basically all of puerto rico is a declared Opportunity Zone.

Edit: I assume above that you are either retired or already work remotely.
I have looked at that, but half the year in Puerto Rico is just too much. I've spent plenty of time there and generally like the island, but I max out at 2 months tops in any one place. And, yes, mostly retired. In that I don't do much more than attend a board meeting now and then.

And... as you say, the chances of getting screwed are pretty high. Either by PR or by the US feds. Same with the US Virgin Islands.
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Re: Buy, Borrow, Die. Legally Never pay Taxes.

Post by Mark Leavy » Fri Jun 18, 2021 4:14 pm

An article in the WSJ today discusses some of the tax change proposals on the table. Specifically in the context of the buy, borrow, die strategy.

The author also published the same article at a site that isn't paywalled.
President Biden’s current proposals do not include a wealth tax, but they do raise rates on long-term gains. To provide more funding for social programs, the administration wants to increase the top rate from 23.8% to 43.4% on income over $1 million for sales after the end of April, 2021.

The proposals would also eliminate the tax exemption for capital gains on death. Instead, each person would receive an exemption of $1 million and $250,000 in benefits on a single home. Gains in excess of that amount will be taxable, effective for deaths occurring after 2021. This change could increase market efficiency by reducing the “lock-in effect” caused by investors who refrain from selling to obtain a step-up.
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Re: Buy, Borrow, Die. Legally Never pay Taxes.

Post by WiseOne » Tue Jun 22, 2021 8:33 am

I'm not 100% sure this is in the actual bill, but supposedly there is an exemption for a family owned business. I'm not sure exactly how that is defined, i.e. whether it includes real estate holdings.

If so, you can bypass the inheritance tax by investing the money in real estate, shared among two or more family members with an LLC setup. Of course the property would then become a fixed asset that cannot ever be sold - and getting family members who are bad at math (i.e. cannot grasp the implications of capital gains tax) to agree to this a few generations hence could be quite the nightmare. Ask me how I know.
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Re: Buy, Borrow, Die. Legally Never pay Taxes.

Post by williamramir » Thu Aug 19, 2021 6:42 am

vincent_c wrote:
Wed Jun 16, 2021 10:20 pm
The one thing I do as tactical allocations are to move assets I think will gain in tax shelters and those that will lose in taxable accounts. I’ve been pretty successful with that.

I also utilize a trust where I am the trustee but neither I nor spouse are beneficiaries. Our heirs are beneficiaries and they can pay for a lot of expenses. This helps you avoid things like wash sales.


Clarify in which cases does the beneficiary have to pay taxes? What if the inheritance is less than the amount of inheritance taxes?
Last edited by williamramir on Fri Aug 20, 2021 12:29 am, edited 1 time in total.
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Re: Buy, Borrow, Die. Legally Never pay Taxes.

Post by vnatale » Thu Aug 19, 2021 8:06 am

williamramir wrote:
Thu Aug 19, 2021 6:42 am

vincent_c wrote:
Wed Jun 16, 2021 10:20 pm

The one thing I do as tactical allocations are to move assets I think will gain in tax shelters and those that will lose in taxable accounts. I’ve been pretty successful with that.

I also utilize a trust where I am the trustee but neither I nor spouse are beneficiaries. Our heirs are beneficiaries and they can pay for a lot of expenses. This helps you avoid things like wash sales.


Clarify in which cases does the beneficiary have to pay taxes? What if the inheritance is less than the amount of inheritance taxes?


I believe that almost everyone here is based in the United States except for a few? Smith1776 and vincent c are located in Canada. Therefore when vincent c speaks he may be referring to Canadian estate taxation which, of course, could be quite different than United States estate taxation.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Buy, Borrow, Die. Legally Never pay Taxes.

Post by seajay » Mon Feb 14, 2022 10:35 am

ahhrunforthehills wrote:
Thu Jun 17, 2021 12:10 pm
But how muddy does the water get when that "active" income was created by "intangible" assets? How about an untraceable intangible asset like crypto-currency?
Recently the UK revenue collection (tax) department has seized crypto assets as part of an investigation into suspected tax evasion. Nick Sharp, HMRC's deputy director economic crime, said the seizure "serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC". A number of arrests have been made of those using "sophisticated methods to try to hide their identities including false and stolen identities", HMRC said. "Confiscation also comes with a very tempting reward due to the Proceeds of Crime Act where the investigating police force can request to keep half of the forfeited goods and the other half will go to the Home Office. So with digital currencies, this can be extremely appealing indeed."

I would imagine that crypto seizures might be only part of total seizure i.e. along with other physical assets. A little crypto could lead to a significant loss (of all your assets/wealth).
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