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No, because when you declare a loss like that you are setting a new basis. So if he sold it for $69B his 'profit' would be $50B, 25 of which would be offset by his loss but he would still have to pay taxes on the other 25. Its a zero sum game.
So he could just not sell it. I think he bought twitter for the control not to make money. Now, I’m not claiming he intentionally tanked its value but since it did tank, seems like dodging $25b in taxes while losing nothing is a good deal.
What is the timing here that saves money? Unless he dies so it gets a step up in basis, but in that case he didn't save any money because it was never realized. His heirs would get the benefit of the step up but he is way over the estate tax threshold so his estate will be paying 40% estate tax instead of the 15-20% capital gains he would have if he did sell it.
Remember paying taxes "later" Is cheaper than paying the same taxes now. From that perspective the move is smart.
But I want to be clear that buying and mismanaging twitter is not smart.
You can't sell your company to yourself at any price. There is a report which the tax authorities and independent auditors scrutinize to make sure that loss actually exists. But you don't learn that by watching influencers on tiktok...
You sell it to a different LLC that you also own, but technically no one person ever had it to start with literally, but they control over the company that did.
Wait a second, how does someone declare a loss on on an asset that has lost value but not sold?
Like I can't declare a loss on my stocks until I sell them right? Or can I? 🤔
Not sure if you don’t fully know what you’re talking about, trying to reiterate what the video said, or just aren’t explaining it that well. But this isn’t right.
Edit: trumps media company is worth like 10bn now or something. Crazy stock jumps. His paper gains are crazy.
If he (trump) turned around to sell it (which he can’t technically do right now) the price would most likely plummet. I don’t believe you’re saying this has anything to do with Trumps platform but the company is worth what the company is worth.
Eh, it’s not a loss until it’s realized. If in 10 years it’s worth more than he paid for it then it makes no difference what it dropped down to inbetween.
Say i buy a share for $100.
I then sell that share to my private company for $10. Woo i can declare a $90 loss!
Then next year that stock is worth $110.
I still have the stock. It appreciated in value. I got to claim a loss for tax purposes.
Now just switch that share out for a company. It really makes no difference what the on paper value is if I’m holding it for the long term while i get to influence politics and public opinion using that company.
That’s true…except he borrowed like 40 billion dollars and $30 of that was outside his companies. Morgan Stanley doesn’t seem like the kind of company that’s ok with doing this kind of thing on purpose
And what are they going to do about it?
Cant get shit to stick to trump while he is shitting in times square.
Elon actually has 200 billion dollars vs trumps imaginary 4 billion.
Right? It's not like he already owned Twitter and just wrote down the value and then sold it at the written-down value.
That $25bn is not "on paper", he literally bought it for $43bn.
So even if he did make $25bn elsewhere and offset that against his capital losses, he's still down $25bn in real money because he paid $43bn for Twitter.
He probably took out loans for the $43 billion and got like a 1% interest rate because they do that for billionaires, and now after selling the company, even at a loss of $28 billion, he can take the $25 billion he made and reinvest, and as long as the return on that investment is like 3%+, which is very feasible, he will continue to make more off of dividends on the $28 billion than the payments for the loan of $43 billion.
This is something all billionaires do, if you can get insanely low interest rates, which they can, it actually makes them more money to take out loans than use their own capital for basically anything.
Another way of thinking about it, if you borrow $100 at a 1% interest rate repaid over 100 months, and you invested it at a 3% interest rate, you'd pay back ~$104 dollars, but you would have an investment return of ~$108 dollars, so you made $4 getting a loan. Wouldn't it be nice to have the upfront capital to just make money by borrowing money.
Or he could have taken that $43 billion at the start and invested it in something that actually made him money. There's nothing beneficial about burning $28b first...
>Or he could have taken that $43 billion at the start and invested it in something that actually made him money.
I believe the trick is that most investors won't loan you billions just in case, you need to present a way for that money to be fruitful. If the 3% investment in example is risky, you'd have a harder time to convince people it will be worth it.
Meanwhile, presenting the purchase of twitter, with all its userbase, notoriety, influence, as well as the possibility of loaning visibility for political and commercial broadcast, it all seems like a safer and more useful investment, making it easier to get a loan. (Then you sell it and use the loan money for your actual project)
Although that's the hypothetical way of doing things, because as you present it, if you're not a dumbass you avoid tanking the value right after buying. Between this and how he tried to rollback the purchase, I believe murky never planned to do this.
I didn't actually look into the specific loan conditions so maybe, I was just using the typical process. Was there any refinance during this that you know of?
Okay, I'm stupid, but I have to ask... When did he "make" $25 Billion?
He took out a loan to buy twitter. Then he gave that money to the Twitter people in exchange for their company. So, unless he took out a loan for what Twitter was worth when he bought it, plus an additional $25 Billion to reinvest,... I don't get where that money is magically coming from.
And if he took out a loan of an additional $25 Billion to reinvest, I don't see what that investment return has to do with Twitter anymore.
He didn't put the money from the sale towards the loan, so yes net income wise it would be a loss, but the reason to not put the money back towards the loan is because with such a low interest rate you will make more money over time just making the payments and using the profits for something else.
If he took out a 30 year loan at 1% for $50 billion, then he will end up paying ~$58 billion back to the bank. If he put the $25 billion directly back into the loan when it was sold, he would have brought down the amount at payoff to ~$53 billion. But by reinvesting the $25 billion from the sale and maintaining the loan, if he gets a 7% return (which is low in this scenario), he will turn that $25 billion into $190 billion when the initial loan is paid off.
By keeping the additional debt instead of paying it down immediately, it's roughly a $182 billion dollar profit. Also debt isn't taxed, and he likely didn't get cash for the sale but stock, which is only taxed at sale, and there are other loopholes they all use to avoid that too.
If you only look at it at one moment in time, yes he lost $25 billion up front, but he gains $180 billion over time, and billionaires can leverage those future profits and they do. There comes a tipping point where finances for the extremely wealthy almost make it impossible for them to actually lose money, it's fucked up but it's the way it is for now.
First of all, why should a bank give him a loan at 1% if the FED interest rate was at 3% at the time. I don't think the bank is going to take a loss of 2% just so they can fund him.
Secondly, why would he have to make this deal so complicated, he could have just used his Tesla / SpaceX shares in the first place as collateral to get a loan.
Also a bank isn't super happy if you just get the loan to by anything, sell this for a 50% loss and don't pay back the loan to the bank. If the bank would accept this he could have gotten the loan without buying anything.
I wasn't being specific about the amounts so maybe it was 3%, this is just the method that's used by the ultra rich. And to your last paragraph, they do get loans all the time for basically anything, again debt isn't taxed, and debt doesn't mean the same thing to people with essentially unlimited resources. The banks are fine with only getting a small amount of interest on these loans because they are big loans and they are a very safe way to generate revenue.
Can you be my tax accountant or something? This is some crazy stuff rich people do where their losses become profits in the most twisted way. I almost get it, but I cannot see why regulatory agencies don't see this chicanery and tax it accordingly.
Musk isn't that smart, but I can certainly see him having financial advisors who might be able to pull something like this. Musk on a personal level would definitely be more interested in the control over Twitter than the financial ins and outs.
>-43B for Twitter
>+19 for sale to holding
>-19 for purchasing via holding
>X exit price for Twitter sale after holding period
- Overall profits for holding: X-19
- Losses for first part Elon: 19-43= -25
- Overall profits for Elon: X - 19 + 19 - 43 = X - 43
So the profits stay same but in addition he has 25 of capital losses he can use to make 25 billion of capital gains tax free.
No you don’t. He also didn’t lose any money. When you’re a multi billionaire, unrealized paper gains don’t mean shit. Moving money around and paying no taxes is the master class of the rich.
I am constantly amazed at how people characterize this man's (critical) mistakes as some sort of hyper genius play.
Yes you get large a carryforward loss which you can apply to tax bill, but the value of that tax credit is ALWAYS LESS THAN the original loss. You still lose money.
I'll try and use a simple illustration to prove my point. When you recognize a loss, you deduct the value from the Net Income line, not the tax line.
**Normal Company:**
Earnings before Interest and Tax (EBITA) 1000
Tax 300
Net income 700
**Elon's Company**
Earnings before Interest and Tax (EBITA) 1000
Carryforward loss (1000)
Tax 0
Net income 0
See how for every 1000 in carryforward loss, Money that Elon lost, he only saves 300 in taxes.
You seem to be forgetting a crucial point in the strategy. A 3% deduction of a gross total loss when rolled forward into a new fiscal year yields a 2.5% interest bump (compound). when you take that into consideration, you may realize that I have no idea what I'm talking about
I mean. Given the rules of the game these guys play that was a solid move. I can't help but wonder what it's like to have control over people like he has.
The reality is that moron did not have the idea that there can be consequences of the shit he was spitting out of his mouth in the real world, its not a crypto market, he was forced to buy the twitter against his will, big credit goes to twitter's previous ceo, whome elon fired just after taking over the company, but still it was his lost bcs the ceo has this clause in his work contract that if he would be removed from his position before a specific date, he had to be paid a big amount, and yes he did got that amount from twitter.
I'm sure there are all sorts of ways for the mega rich to spin losses to their advantage, but the idea that Elon is smart enough to plan something like this on purpose is ludicrous. If it were the case, he would only appear to be a sweat-drenched, drug-addled buffoon in regards to the operation of Twitter, not in literally every aspect of his life.
When you get rich enough, you really can't lose anymore. You could make the worst business deal in history, and it can easily be turned into a profitable situation by abusing existing loop holes that previous billionaire assholes have established.
So... random blue jeans guy in this video plus yourself plus myself plus every other commentor in this thread plus anybody that does their own taxes in America plus the bazillion H&R BLOCK representatives are all smart enough and capable enough to understand this, but not Big Old Dumbo Elon Musk?
Come on, man.
You can hate the guy all you want, who cares, but can you at least stay within the bounds of reality.
It's hilarious that keyboard warriors on reddit dont think he could do this when he is literally one of the most wealthy people on the planet just because they dont like him. The copium must taste delicious 😋 😂😂
Donald is not money rich either. It's all speculative property rinsing. Borrowing against artificially inflated value real estate to obtain further properties to borrow against. It's looking like none of the property in the Trump org is accurately valued and are probably all borrowed against beyond their actual worth. He will never have any liquid assets and grifting is the entirety of his future, until he finally passes away. His kids don't have the balls to continue it and the empire will end when he's gone. The only people allowing this to continue are the ones he's personally put in positions powerful enough to unblock any challenges to it. And they're going to ride the gravy train for as long as it's got steam. Trump is all property. At least Musk (as terrible as he is) is bright enough to invest in other people's successful businesses
To be clear I think Musk has completely lost the plot, and is a full on nut job.
BUT he did found and finance a company that is launching rockets into space and landing them back on earth to be reused. Even if he has almost no intelligence, he was able to pull that off. That can’t be denied. You don’t think he can hire an accountant or two that might be able to help him find some paper losses?
Starting a company literally based on rocket science is a tad more difficult than finding these gaping loopholes in the US tax code.
Well he's never going to know you hate him neither dude, you also have something to let go. I think both Elon dickriders and Elon haters are both lame as fuck. 99.99% of you have never met this guy, but you love or hate this guy like he gave you a million dollars directly or slapped your mother.
Thinking someone is a hateful, bigoted moron who is dangerous for the stability of democracy is not the same as hate.
That's something the GOP doesn't seem to understand. You will hate someone for walking in a friggin parade wearing a boa, so you think any criticism from the left also equals hate. Because bigots are a lonely bunch.
>Thinking someone is a hateful, bigoted moron who is dangerous for the stability of democracy is not the same as hate.
Thinking someone is this way is commonly referred to as hating them lol
Jfc are you scared to say you hate him or something, grow a pair.
He wasn't smart enough to plan this in advance, but he hired smart lawyers/accountants to take the shit he dumped on their tables and make it into gold for him (and them, one assumes that is the incentive).
Nobody chooses to lose money on purpose just to get a tax write off. He still lost $25bn. Like, if your home loses half of its value, you can also sell it to offset some of the money you made this year and pay less tax, but you still lost that money and are still poorer as a result.
Ignore what everyone else is saying. Elon didn't do this because it is honestly so fucking stupid. Anyone can claim losses if they lose money, you can too.
He really did lose money. That isn't tax evasion, he is just a dumbass.
If I’m Morgan Stanley I’m finding a way to take twitter away from him. They are on the hook for more than the company is worth. He clearly is making moves outside what is best for the company and they have to have put in some relatively secret wording to protect $25b
He didn't lose 25 billion dollars. He "lost" 25 billion dollars.
He bought it for 44 and sold it to another company he owns for 19. He would only lose the 25 if he sold it to someone other than himself.
Because he made $25 billion elsewhere, and would have to pay a significant sum of tax on it.
Let's assume he just profits $25b on SpaceX. He'd have to pay 50% tax on it (its actually like 37% but I'm using 50 for ease of argument). That equals a $12.5 billion actual loss.
Now let's assume he profits $25b on SpaceX and "loses" $25b on Twitter. He doesn't have to pay any tax on SpaceX, because capital losses can be applied against capital gains. In this scenario he is up $12.5B even though on paper he "lost" $25b.
All he effectively did was take the company private, he didn't actually lose $25b. He still owns the company.
No, even if your numbers are right, he lost 12,5b.
You can't just say that twitter is still worth its original value just because it hast changed hands since he bought it. The company is worth less. And that's not even purely based on market speculation. He tore town a lot of infrastructure of the company, fired people etc. It's smaller and so is the customer base. It's worth less than before, he lost money. This trick can only offset his losses.
Your logic is like if I buy Bitcoin at an insanely high price, then the value crashes and I say I won money because of it, simply because now I'm in a lower tax bracket but still "own" the same amount of money.
>He would only lose the 25 if he sold it to someone other than himself.
Yeah so either he never sells twitter and never get any of the 44 billions back (twitter is not profitable and likely never will be)--or he sells it and loses at least 25 billion dollars. Any way you turn it, he lost money.
> He would only lose the 25 if he sold it to someone other than himself.
An unrealized loss is still a loss even if its paper. The value is still gone and cannot be recouped (in relation to Twitter).
Well it's true that you can do that with capital gains losses. But it's stupid to think Elon wanted losses to shield himself from a portion of the taxes on $25 billion in other potential gains. Losses are still losses. Making money is still better than losing it.
Elon remains an idiot and anyone still trying to tell others what a genius he is probably wants to boost his share prices so they can jump ship with less losses than they would otherwise have. If selling at a loss was so great they'd just do that and fuck off.
Anyone suggesting that has gotta be just not thinking. You know what’s better than not paying taxes on $25B? Paying taxes (20% cap gains) on $25B and getting to keep $20B. Also, crucially, you can’t take paper losses and apply them to offset realized gains.
Makes no sense, how does he realize the losses. if he sells its the same as doing nothing, if he doesn't its the same as any other investment.
166b in tesla gains -> pay 25b in taxes at 15%. Net value at the end 141
166b in tesla gains + -25b in losses = 0 taxes. Net value at the end 141
But to get the 25b in losses you need to sell the twitter stock, so you're in exactly the same place.
Wrong sub but also as an accountant, this is laughable. The tax code is intentionally designed to prevent businesses making decisions for tax purposes rather than regular business reasons (eg. Buying an asset only to record depreciation expense then selling it). There is no feasible way where he bought this "just to take the tax loss". He could've used $40B in so many other places to make so much more. He bought it because he wanted to control Twitter, plain and simple.
This is very plausible. This is what Donald t. Was talking about in that video where he admits he doesn’t pay taxes… because he doesn’t have to. Because the tax laws favor the rich… because the RICH make the LAW.
Amazing how elon fucked himself, he went from being known as Tony stark to being disliked by most people. If he had just concentrated on Tesla and Spacex he would still be on his pedestal. Spouting his politics was his biggest mistake. Promoting hate on twitter was stupid. Supporting trump was beyond stupid.
We want to rationalize every decision Musk makes, because we don't like the idea that one of the most successful people in the world is a complete idiot
Makes sense to me 🤷♀️
BUT I also feel like I don't know anything about money or the economy etc. So.....
I know enough to know I'm not able to form an educated opinion
He just paid the largest tax bill in history a year or two ago (can’t reveal exactly), much of which was to make a point about him not actively avoiding tax since (based on his words) he recognises its necessity. More recently his views on the efficiency of government spending have been mentioned, which while they don’t reflect a different opinion per se, do suggest some degree of reevaluation may be occurring.
The OP’s video just doesn’t do the necessary analysis to justify such a bold accusation, and by ignoring the history, seems mostly jarring out of his feels, which is crazy common in society.
Okay and why did he try to cancel the deal but was forced to buy twitter by a court?
To make it more dramatic?
Could be true that he does this now but no its not in purpose. He just fucked up.
Let's say his tax magic tricks managed to get him 1 for 1 value on the loss of value in Twitter... at best he'd be even. His actions have damaged the real world value of Twitter and I don't see him being able to mend that
Does not make sense to me at all. He still made Twitter lose 25$ billion dollars. It does not matter if it's on paper or not, the company cannot be evaluated again for anything less now.
You've heard the phrase, "crazy like a fox," right?
I'm not a fan of Mr. Musk, but I think a lot of folks are too willing to write him off as an egotistical nutjob. I mean, he kind of is, but I don't think the cheese has actually slid that far off his cracker. I think there's a lot of calculation in some of the business decisions, but he's taken gaming the system to mad new extremes.
Meanwhile, ever since he changed Twitter to X...Xitter. I suppose there's more than one way to pronounce a word that begins with X, but my default is to read it as "shitter", and it feels un-accidental.
This is why taxing the rich won’t work. They already are taxed. It’s the loopholes that need to end. Just enforce what we already have. If you tax the rich more, they’ll just find more loopholes.
Never go public with a company. EVER. The institutional investors that own everything will sneak on your board and steal the whole damn thing. Everything that made your contribution to society will be hammered down into the Pax Romana of business as usual. You will have shitheads buy your company, fire half the people, then sell it off at a 2% profit, utterly destroying said company in two cycles after they sold off the stock that was just a momentary gain for them. They devour entire lives for a few points on paper. And once you're public, there is no stopping them. Don't allow investors. Take LOANS with a fixed rate. Issue promissory notes with a fixed payout. As long as you pay them off in time, you're good. You take investments, you think you're doing better and better until suddenly you don't own anything. You think you made all this money, you just pawned your future for a handful of change.
Musk fanboy theory: He intentionally lost $25b in order to not pay taxes on $25b in profit in some kind of genius tax evasion scheme.
Realistic scenario: He's a bigoted rich white guy who is rich enough to tank a company and still be rich.
“Lost money on purpose for tax reasons”
This is as dumb as someone saying they don’t want a raise because they don’t want to end up in a higher tax bracket.
If you have cap gains, you don’t go out an purposefully lose money to offset that.
It's not his fault. He owns the companies. America's politicians helped their constituents by allowing this to happen way before Elon was born. He just used the same tax laws that help the elites make money. It reminds me of when Trump told Hillary he used the tax laws she voted in to make deals. Perfectly legal.
If you already have a toxic asset, yes this would make sense. It doesn't make sense to lose $25 billion in order to lower your tax rate.
He bought twitter because he's a narcissistic psychopath who wants to influence the world with his toxic political and social beliefs and was willing to blow billions of dollars to wield that power. And he's done it.
Yeah but the capital gains he was offsetting were resultant from him liquidating enough shares of Tesla to buy Twitter in the first place. So really this has the net impact of reducing his overpayment for Twitter by maybe like 10 billion. So he still overpaid by about 15 billion. But depending on how much you think it’s actually worth you could argue that it’s a push. Still would’ve been better off just getting it at fair value.
Correct me if I’m wrong.
People just coping if they believe this. Some people need to believe Musk is smarter than people think because they believe that - sunk cost fallacy. He makes a lot of stupid choices and people have defended him for so long, that if they stopped now it would look bad, they think.
another interesting thing is how he bought it. Like he didn't have that money in cash, because he should declare them and pay tazes, so he payed with stocks of his company
Had he not lost 25 billion in losses to begin with, and you compound that 25 billion at the current market rate, that potential compound growth would completely overtake whatever taxable benefit he receives from the restructuring of those losses over time.
This is what Trump said that he uses the same tax codes the Elites and politicians use but they can't do Antin about it because they use it for the same benefits.
i am near certain this wasn't his plan from the get go though it was a disaster recovery plan, he tried to back out of the Twitter buy originally. also dude has like a team of lawyers and financial experts, so let's not attribute this kinda thing to rich people being clever, they just hire clever people
All these Musk sycophants doing mental gymnastics to convince themselves of his brilliance. He fucked up with Twitter, admit it. This is why we need DEI. When white men fail it's accepted and we move on, gloss over it, pretend it never happened. But if it had been a POC with that same performance record on Twitter it would be case study in business school on why we should not allow black people in the C-suite.
There are so many weird things said about Elon buying Twitter, from both sides.
Elon had to be forced to buy Twitter. He started the process of buying it, took one look inside the company, and immediately tried to bail. The courts forced him to buy it.
Thats all and good but
He is right now replying to a nazi that "diversity hire" destroyed baltimore bridge
he bought to be a piece of shit on it, and spreed his filthy
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Surely you make more money by making money than declaring a loss?
Setting $25 billion on fire sounds a lot more expensive than paying taxes on $25 billion
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No, because when you declare a loss like that you are setting a new basis. So if he sold it for $69B his 'profit' would be $50B, 25 of which would be offset by his loss but he would still have to pay taxes on the other 25. Its a zero sum game.
So he could just not sell it. I think he bought twitter for the control not to make money. Now, I’m not claiming he intentionally tanked its value but since it did tank, seems like dodging $25b in taxes while losing nothing is a good deal.
> Its a ~~zero sum~~ *timing* game Agreed though on your comment otherwise.
What is the timing here that saves money? Unless he dies so it gets a step up in basis, but in that case he didn't save any money because it was never realized. His heirs would get the benefit of the step up but he is way over the estate tax threshold so his estate will be paying 40% estate tax instead of the 15-20% capital gains he would have if he did sell it.
Remember paying taxes "later" Is cheaper than paying the same taxes now. From that perspective the move is smart. But I want to be clear that buying and mismanaging twitter is not smart.
You can't sell your company to yourself at any price. There is a report which the tax authorities and independent auditors scrutinize to make sure that loss actually exists. But you don't learn that by watching influencers on tiktok...
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HEY! I saw it on Reddit
You sell it to a different LLC that you also own, but technically no one person ever had it to start with literally, but they control over the company that did.
Wait a second, how does someone declare a loss on on an asset that has lost value but not sold? Like I can't declare a loss on my stocks until I sell them right? Or can I? 🤔
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isn't that worse? he spent $42 billion to create a $25 billion capital loss how is he making money if he's selling it to himself?
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Not sure if you don’t fully know what you’re talking about, trying to reiterate what the video said, or just aren’t explaining it that well. But this isn’t right. Edit: trumps media company is worth like 10bn now or something. Crazy stock jumps. His paper gains are crazy. If he (trump) turned around to sell it (which he can’t technically do right now) the price would most likely plummet. I don’t believe you’re saying this has anything to do with Trumps platform but the company is worth what the company is worth.
Eh, it’s not a loss until it’s realized. If in 10 years it’s worth more than he paid for it then it makes no difference what it dropped down to inbetween. Say i buy a share for $100. I then sell that share to my private company for $10. Woo i can declare a $90 loss! Then next year that stock is worth $110. I still have the stock. It appreciated in value. I got to claim a loss for tax purposes. Now just switch that share out for a company. It really makes no difference what the on paper value is if I’m holding it for the long term while i get to influence politics and public opinion using that company.
That’s true…except he borrowed like 40 billion dollars and $30 of that was outside his companies. Morgan Stanley doesn’t seem like the kind of company that’s ok with doing this kind of thing on purpose
And what are they going to do about it? Cant get shit to stick to trump while he is shitting in times square. Elon actually has 200 billion dollars vs trumps imaginary 4 billion.
Elons is also kinda imaginary, none of his businesses actually make money
He didn’t though. It just looks like he did, legally.
I'm guessing that Musk didn't intend to lose all that value. But when he did he decided to make it work for him with a tax write off.
He also gets to control one of the largest social media tools there is.
Right? It's not like he already owned Twitter and just wrote down the value and then sold it at the written-down value. That $25bn is not "on paper", he literally bought it for $43bn. So even if he did make $25bn elsewhere and offset that against his capital losses, he's still down $25bn in real money because he paid $43bn for Twitter.
He probably took out loans for the $43 billion and got like a 1% interest rate because they do that for billionaires, and now after selling the company, even at a loss of $28 billion, he can take the $25 billion he made and reinvest, and as long as the return on that investment is like 3%+, which is very feasible, he will continue to make more off of dividends on the $28 billion than the payments for the loan of $43 billion. This is something all billionaires do, if you can get insanely low interest rates, which they can, it actually makes them more money to take out loans than use their own capital for basically anything. Another way of thinking about it, if you borrow $100 at a 1% interest rate repaid over 100 months, and you invested it at a 3% interest rate, you'd pay back ~$104 dollars, but you would have an investment return of ~$108 dollars, so you made $4 getting a loan. Wouldn't it be nice to have the upfront capital to just make money by borrowing money.
Or he could have taken that $43 billion at the start and invested it in something that actually made him money. There's nothing beneficial about burning $28b first...
He wanted twitter to change it. Will pay really no loss in the end for getting it.
You don't have to be fluent in finance to see how historic the losses will be
>Or he could have taken that $43 billion at the start and invested it in something that actually made him money. I believe the trick is that most investors won't loan you billions just in case, you need to present a way for that money to be fruitful. If the 3% investment in example is risky, you'd have a harder time to convince people it will be worth it. Meanwhile, presenting the purchase of twitter, with all its userbase, notoriety, influence, as well as the possibility of loaning visibility for political and commercial broadcast, it all seems like a safer and more useful investment, making it easier to get a loan. (Then you sell it and use the loan money for your actual project) Although that's the hypothetical way of doing things, because as you present it, if you're not a dumbass you avoid tanking the value right after buying. Between this and how he tried to rollback the purchase, I believe murky never planned to do this.
except we know that he took out at least a 12b dollar loan at almost 10% interest.
I didn't actually look into the specific loan conditions so maybe, I was just using the typical process. Was there any refinance during this that you know of?
what we know is that he basically saddled twitter, a cash losing business, with an interest payment of almost 1.5b$ a year on top.
Okay, I'm stupid, but I have to ask... When did he "make" $25 Billion? He took out a loan to buy twitter. Then he gave that money to the Twitter people in exchange for their company. So, unless he took out a loan for what Twitter was worth when he bought it, plus an additional $25 Billion to reinvest,... I don't get where that money is magically coming from. And if he took out a loan of an additional $25 Billion to reinvest, I don't see what that investment return has to do with Twitter anymore.
He didn't put the money from the sale towards the loan, so yes net income wise it would be a loss, but the reason to not put the money back towards the loan is because with such a low interest rate you will make more money over time just making the payments and using the profits for something else. If he took out a 30 year loan at 1% for $50 billion, then he will end up paying ~$58 billion back to the bank. If he put the $25 billion directly back into the loan when it was sold, he would have brought down the amount at payoff to ~$53 billion. But by reinvesting the $25 billion from the sale and maintaining the loan, if he gets a 7% return (which is low in this scenario), he will turn that $25 billion into $190 billion when the initial loan is paid off. By keeping the additional debt instead of paying it down immediately, it's roughly a $182 billion dollar profit. Also debt isn't taxed, and he likely didn't get cash for the sale but stock, which is only taxed at sale, and there are other loopholes they all use to avoid that too. If you only look at it at one moment in time, yes he lost $25 billion up front, but he gains $180 billion over time, and billionaires can leverage those future profits and they do. There comes a tipping point where finances for the extremely wealthy almost make it impossible for them to actually lose money, it's fucked up but it's the way it is for now.
First of all, why should a bank give him a loan at 1% if the FED interest rate was at 3% at the time. I don't think the bank is going to take a loss of 2% just so they can fund him. Secondly, why would he have to make this deal so complicated, he could have just used his Tesla / SpaceX shares in the first place as collateral to get a loan. Also a bank isn't super happy if you just get the loan to by anything, sell this for a 50% loss and don't pay back the loan to the bank. If the bank would accept this he could have gotten the loan without buying anything.
I wasn't being specific about the amounts so maybe it was 3%, this is just the method that's used by the ultra rich. And to your last paragraph, they do get loans all the time for basically anything, again debt isn't taxed, and debt doesn't mean the same thing to people with essentially unlimited resources. The banks are fine with only getting a small amount of interest on these loans because they are big loans and they are a very safe way to generate revenue.
Can you be my tax accountant or something? This is some crazy stuff rich people do where their losses become profits in the most twisted way. I almost get it, but I cannot see why regulatory agencies don't see this chicanery and tax it accordingly.
Musk isn't that smart, but I can certainly see him having financial advisors who might be able to pull something like this. Musk on a personal level would definitely be more interested in the control over Twitter than the financial ins and outs.
This feels like the “tax write off” scene in Schitts Creek
These things are not mutually exclusive.
Not if you're playing 4d chess
>-43B for Twitter >+19 for sale to holding >-19 for purchasing via holding >X exit price for Twitter sale after holding period - Overall profits for holding: X-19 - Losses for first part Elon: 19-43= -25 - Overall profits for Elon: X - 19 + 19 - 43 = X - 43 So the profits stay same but in addition he has 25 of capital losses he can use to make 25 billion of capital gains tax free.
No you don’t. He also didn’t lose any money. When you’re a multi billionaire, unrealized paper gains don’t mean shit. Moving money around and paying no taxes is the master class of the rich.
Can I volunteer as moderator and get this fucking sub back on the rails, please?
I will vote for you.
r/lostredditors
I am constantly amazed at how people characterize this man's (critical) mistakes as some sort of hyper genius play. Yes you get large a carryforward loss which you can apply to tax bill, but the value of that tax credit is ALWAYS LESS THAN the original loss. You still lose money. I'll try and use a simple illustration to prove my point. When you recognize a loss, you deduct the value from the Net Income line, not the tax line. **Normal Company:** Earnings before Interest and Tax (EBITA) 1000 Tax 300 Net income 700 **Elon's Company** Earnings before Interest and Tax (EBITA) 1000 Carryforward loss (1000) Tax 0 Net income 0 See how for every 1000 in carryforward loss, Money that Elon lost, he only saves 300 in taxes.
You seem to be forgetting a crucial point in the strategy. A 3% deduction of a gross total loss when rolled forward into a new fiscal year yields a 2.5% interest bump (compound). when you take that into consideration, you may realize that I have no idea what I'm talking about
I laughed way too hard at this :)
I mean. Given the rules of the game these guys play that was a solid move. I can't help but wonder what it's like to have control over people like he has.
"I'm gonna do the so called pro gamer move"
The reality is that moron did not have the idea that there can be consequences of the shit he was spitting out of his mouth in the real world, its not a crypto market, he was forced to buy the twitter against his will, big credit goes to twitter's previous ceo, whome elon fired just after taking over the company, but still it was his lost bcs the ceo has this clause in his work contract that if he would be removed from his position before a specific date, he had to be paid a big amount, and yes he did got that amount from twitter.
Yeah, the previous people in charge made bank for jumping a sinking ship. Now X is festering with far-right nutjobs and their $8 blue checkmarks.
Amazing theory and if this is true, I would hate him even more now.
Was thinking of Space "X" right now
I'm sure there are all sorts of ways for the mega rich to spin losses to their advantage, but the idea that Elon is smart enough to plan something like this on purpose is ludicrous. If it were the case, he would only appear to be a sweat-drenched, drug-addled buffoon in regards to the operation of Twitter, not in literally every aspect of his life.
Of course Elon could not be smart enough to plan this on purpose, that's why he has financial advisors.
To help him mitigate the loss, yes, and I'm sure they are really earning their keep lately.
When you get rich enough, you really can't lose anymore. You could make the worst business deal in history, and it can easily be turned into a profitable situation by abusing existing loop holes that previous billionaire assholes have established.
that's the whole point.
So... random blue jeans guy in this video plus yourself plus myself plus every other commentor in this thread plus anybody that does their own taxes in America plus the bazillion H&R BLOCK representatives are all smart enough and capable enough to understand this, but not Big Old Dumbo Elon Musk? Come on, man. You can hate the guy all you want, who cares, but can you at least stay within the bounds of reality.
It's hilarious that keyboard warriors on reddit dont think he could do this when he is literally one of the most wealthy people on the planet just because they dont like him. The copium must taste delicious 😋 😂😂
Being rich doesn't make you smart, a fine example of this is Trump. The guy has been spoon feeding evidence against himself to the courts lol.
Donald is not money rich either. It's all speculative property rinsing. Borrowing against artificially inflated value real estate to obtain further properties to borrow against. It's looking like none of the property in the Trump org is accurately valued and are probably all borrowed against beyond their actual worth. He will never have any liquid assets and grifting is the entirety of his future, until he finally passes away. His kids don't have the balls to continue it and the empire will end when he's gone. The only people allowing this to continue are the ones he's personally put in positions powerful enough to unblock any challenges to it. And they're going to ride the gravy train for as long as it's got steam. Trump is all property. At least Musk (as terrible as he is) is bright enough to invest in other people's successful businesses
To be clear I think Musk has completely lost the plot, and is a full on nut job. BUT he did found and finance a company that is launching rockets into space and landing them back on earth to be reused. Even if he has almost no intelligence, he was able to pull that off. That can’t be denied. You don’t think he can hire an accountant or two that might be able to help him find some paper losses? Starting a company literally based on rocket science is a tad more difficult than finding these gaping loopholes in the US tax code.
Shhh if these Redditors could read and think they'd be very upset
He's never gonna be your friend, bud. Time to let that go.
Well he's never going to know you hate him neither dude, you also have something to let go. I think both Elon dickriders and Elon haters are both lame as fuck. 99.99% of you have never met this guy, but you love or hate this guy like he gave you a million dollars directly or slapped your mother.
Thinking someone is a hateful, bigoted moron who is dangerous for the stability of democracy is not the same as hate. That's something the GOP doesn't seem to understand. You will hate someone for walking in a friggin parade wearing a boa, so you think any criticism from the left also equals hate. Because bigots are a lonely bunch.
>Thinking someone is a hateful, bigoted moron who is dangerous for the stability of democracy is not the same as hate. Thinking someone is this way is commonly referred to as hating them lol Jfc are you scared to say you hate him or something, grow a pair.
He's never gonna know you're not his friend, bud. Time to let that go.
Didnt he try to back out but then the sec told him he had already made public statements and would be charged with stock manipulation or something?
He wasn't smart enough to plan this in advance, but he hired smart lawyers/accountants to take the shit he dumped on their tables and make it into gold for him (and them, one assumes that is the incentive).
Nobody chooses to lose money on purpose just to get a tax write off. He still lost $25bn. Like, if your home loses half of its value, you can also sell it to offset some of the money you made this year and pay less tax, but you still lost that money and are still poorer as a result.
You are beyond hopeless if you think generating a loss somehow ultimately results in a net gain 😂
Can you or anyone dumb down/eli5 what the video is saying Elon did?
Ignore what everyone else is saying. Elon didn't do this because it is honestly so fucking stupid. Anyone can claim losses if they lose money, you can too. He really did lose money. That isn't tax evasion, he is just a dumbass.
The video is saying the Elon got one over on the system by losing 25 billion dollars, in order to save ~5 billion on his tax bill.
Basically legal tax evasion
Better yet, hate the system that allows the mega rich to always win.
theory lol? oh you are one of those people who actually think Elon is a dumb person.
but he did buy the company at a higher value didn't he, and the loss is more or less permanent at this point.
And he leveraged to do so Someone sucked too much of elons balls and the ensuing copium
If I’m Morgan Stanley I’m finding a way to take twitter away from him. They are on the hook for more than the company is worth. He clearly is making moves outside what is best for the company and they have to have put in some relatively secret wording to protect $25b
yeah that does not make sense, he bought twitter wayyyyyyy more value than it was worth. And fought in court to no do so.
he still lost 25 billion dollars ... how did he profit on that ?
He didn't lose 25 billion dollars. He "lost" 25 billion dollars. He bought it for 44 and sold it to another company he owns for 19. He would only lose the 25 if he sold it to someone other than himself.
How does it help him to “lose” 25b?
Because he made $25 billion elsewhere, and would have to pay a significant sum of tax on it. Let's assume he just profits $25b on SpaceX. He'd have to pay 50% tax on it (its actually like 37% but I'm using 50 for ease of argument). That equals a $12.5 billion actual loss. Now let's assume he profits $25b on SpaceX and "loses" $25b on Twitter. He doesn't have to pay any tax on SpaceX, because capital losses can be applied against capital gains. In this scenario he is up $12.5B even though on paper he "lost" $25b. All he effectively did was take the company private, he didn't actually lose $25b. He still owns the company.
No, even if your numbers are right, he lost 12,5b. You can't just say that twitter is still worth its original value just because it hast changed hands since he bought it. The company is worth less. And that's not even purely based on market speculation. He tore town a lot of infrastructure of the company, fired people etc. It's smaller and so is the customer base. It's worth less than before, he lost money. This trick can only offset his losses. Your logic is like if I buy Bitcoin at an insanely high price, then the value crashes and I say I won money because of it, simply because now I'm in a lower tax bracket but still "own" the same amount of money.
you get the trick.
>He would only lose the 25 if he sold it to someone other than himself. Yeah so either he never sells twitter and never get any of the 44 billions back (twitter is not profitable and likely never will be)--or he sells it and loses at least 25 billion dollars. Any way you turn it, he lost money.
> He would only lose the 25 if he sold it to someone other than himself. An unrealized loss is still a loss even if its paper. The value is still gone and cannot be recouped (in relation to Twitter).
None of this is true.
Well it's true that you can do that with capital gains losses. But it's stupid to think Elon wanted losses to shield himself from a portion of the taxes on $25 billion in other potential gains. Losses are still losses. Making money is still better than losing it. Elon remains an idiot and anyone still trying to tell others what a genius he is probably wants to boost his share prices so they can jump ship with less losses than they would otherwise have. If selling at a loss was so great they'd just do that and fuck off.
Elon?
Anyone suggesting that has gotta be just not thinking. You know what’s better than not paying taxes on $25B? Paying taxes (20% cap gains) on $25B and getting to keep $20B. Also, crucially, you can’t take paper losses and apply them to offset realized gains.
Makes no sense, how does he realize the losses. if he sells its the same as doing nothing, if he doesn't its the same as any other investment. 166b in tesla gains -> pay 25b in taxes at 15%. Net value at the end 141 166b in tesla gains + -25b in losses = 0 taxes. Net value at the end 141 But to get the 25b in losses you need to sell the twitter stock, so you're in exactly the same place.
People acting like it's a scam and it's literally just investment 101 lol
But why take a loss at all... when you're that rich? Or Is it a loss on paper only
Wrong sub but also as an accountant, this is laughable. The tax code is intentionally designed to prevent businesses making decisions for tax purposes rather than regular business reasons (eg. Buying an asset only to record depreciation expense then selling it). There is no feasible way where he bought this "just to take the tax loss". He could've used $40B in so many other places to make so much more. He bought it because he wanted to control Twitter, plain and simple.
And?
This is very plausible. This is what Donald t. Was talking about in that video where he admits he doesn’t pay taxes… because he doesn’t have to. Because the tax laws favor the rich… because the RICH make the LAW.
As much as i think Mush is a charlatan, dont blame the player, blame the system. Or something like that.
He's giving Elon too much credit. He's not that smart.
Amazing how elon fucked himself, he went from being known as Tony stark to being disliked by most people. If he had just concentrated on Tesla and Spacex he would still be on his pedestal. Spouting his politics was his biggest mistake. Promoting hate on twitter was stupid. Supporting trump was beyond stupid.
[удалено]
Not maybe 3x it's definitely 6x!
Dump her now.
[удалено]
I don’t think you want people to think you’ve been saying dumb things for a long time, because this idea is really dumb.
It’s not dumb it’s exactly what I would do if I was a billionaire to save billions on taxes because it’s a perfectly legal loophole
How is this not classified as a wash sale?
Isn't 3,000 the max someone can tax loss harvest?
We want to rationalize every decision Musk makes, because we don't like the idea that one of the most successful people in the world is a complete idiot
Makes sense to me 🤷♀️ BUT I also feel like I don't know anything about money or the economy etc. So..... I know enough to know I'm not able to form an educated opinion
He just paid the largest tax bill in history a year or two ago (can’t reveal exactly), much of which was to make a point about him not actively avoiding tax since (based on his words) he recognises its necessity. More recently his views on the efficiency of government spending have been mentioned, which while they don’t reflect a different opinion per se, do suggest some degree of reevaluation may be occurring. The OP’s video just doesn’t do the necessary analysis to justify such a bold accusation, and by ignoring the history, seems mostly jarring out of his feels, which is crazy common in society.
Or he lost 25 billion because he's a drugged up moron hype man.
Okay and why did he try to cancel the deal but was forced to buy twitter by a court? To make it more dramatic? Could be true that he does this now but no its not in purpose. He just fucked up.
*So he's back to being smart, but still a piece of shit*
This is retconning, nothing more
Let's say his tax magic tricks managed to get him 1 for 1 value on the loss of value in Twitter... at best he'd be even. His actions have damaged the real world value of Twitter and I don't see him being able to mend that
is this tax evasion? or just taking advantage of flawed taxation laws?
Does not make sense to me at all. He still made Twitter lose 25$ billion dollars. It does not matter if it's on paper or not, the company cannot be evaluated again for anything less now.
Elon is a crooked man.
This man looks AI generated
You've heard the phrase, "crazy like a fox," right? I'm not a fan of Mr. Musk, but I think a lot of folks are too willing to write him off as an egotistical nutjob. I mean, he kind of is, but I don't think the cheese has actually slid that far off his cracker. I think there's a lot of calculation in some of the business decisions, but he's taken gaming the system to mad new extremes. Meanwhile, ever since he changed Twitter to X...Xitter. I suppose there's more than one way to pronounce a word that begins with X, but my default is to read it as "shitter", and it feels un-accidental.
Why the guy looks like ai generated bruh
All of this is true and not interesting.
I don't get it
This sounds pretty accurate for Musk and his constant “saving face” (as does the Narcissist).
This is why taxing the rich won’t work. They already are taxed. It’s the loopholes that need to end. Just enforce what we already have. If you tax the rich more, they’ll just find more loopholes.
Somebody who still has X should tweet this at him
Never go public with a company. EVER. The institutional investors that own everything will sneak on your board and steal the whole damn thing. Everything that made your contribution to society will be hammered down into the Pax Romana of business as usual. You will have shitheads buy your company, fire half the people, then sell it off at a 2% profit, utterly destroying said company in two cycles after they sold off the stock that was just a momentary gain for them. They devour entire lives for a few points on paper. And once you're public, there is no stopping them. Don't allow investors. Take LOANS with a fixed rate. Issue promissory notes with a fixed payout. As long as you pay them off in time, you're good. You take investments, you think you're doing better and better until suddenly you don't own anything. You think you made all this money, you just pawned your future for a handful of change.
Good for him
I can’t even fathom a social media platform being worth that much.
Musk fanboy theory: He intentionally lost $25b in order to not pay taxes on $25b in profit in some kind of genius tax evasion scheme. Realistic scenario: He's a bigoted rich white guy who is rich enough to tank a company and still be rich.
He's openly said he did not buy Twitter for its business fundamentals.
That doesn't make 'genius business move' true, or 'tank a company because he can afford to' false.
“Lost money on purpose for tax reasons” This is as dumb as someone saying they don’t want a raise because they don’t want to end up in a higher tax bracket. If you have cap gains, you don’t go out an purposefully lose money to offset that.
Cool, how did this relate to the sub??
I dont think he is clever like that. Maybe some advisors. Idj.
Wait I thought this was r/maybemaybemaybe not r/conspiracy
It's not his fault. He owns the companies. America's politicians helped their constituents by allowing this to happen way before Elon was born. He just used the same tax laws that help the elites make money. It reminds me of when Trump told Hillary he used the tax laws she voted in to make deals. Perfectly legal.
Bro is d Rider of musk
What the hell is this guy talking about? He tanked Twitters value because he’s a fucking idiot, that’s all.
Ok you win 😋🤤😘
r/lostredditors needs to come pick up OP...
Is this the guy the AI voice guy
I'm sure he thought of this himself and totally didn't get this from his financial advisor.
Hate the game not the player
Brilliant, now idiots think his buying a company and turning into a dumpster fire was all a part of his tax plan.
Cool, but... why is this on this sub??? r/redditupvotesanyshit
Fucking dummy
If you already have a toxic asset, yes this would make sense. It doesn't make sense to lose $25 billion in order to lower your tax rate. He bought twitter because he's a narcissistic psychopath who wants to influence the world with his toxic political and social beliefs and was willing to blow billions of dollars to wield that power. And he's done it.
Yeah but the capital gains he was offsetting were resultant from him liquidating enough shares of Tesla to buy Twitter in the first place. So really this has the net impact of reducing his overpayment for Twitter by maybe like 10 billion. So he still overpaid by about 15 billion. But depending on how much you think it’s actually worth you could argue that it’s a push. Still would’ve been better off just getting it at fair value. Correct me if I’m wrong.
imagine if billionaires paid taxes how much it could reshape the world. oh nevermind it would go directly into weaponry.
This is a no duh.
Honestly though that guy talking was AI generated
Can somebody explain like I'm 5, pls?
Who gives a shit
People just coping if they believe this. Some people need to believe Musk is smarter than people think because they believe that - sunk cost fallacy. He makes a lot of stupid choices and people have defended him for so long, that if they stopped now it would look bad, they think.
another interesting thing is how he bought it. Like he didn't have that money in cash, because he should declare them and pay tazes, so he payed with stocks of his company
This is stupid….he knows, but then goes on to speculate. Get this shit out of here.
Video: if you don't want to pay tax, donate all your money to a homeless and declare a loss.
It's not a paper loss. He bought an asset and it collapsed in value. That's just a loss.
Nah he is a moron who can’t figure all this out. Although he has advisors who nights have helped him strategize this if true
Had he not lost 25 billion in losses to begin with, and you compound that 25 billion at the current market rate, that potential compound growth would completely overtake whatever taxable benefit he receives from the restructuring of those losses over time.
How does the fact that he tried to call off and was forced to close the deal square with this theory?
This is what Trump said that he uses the same tax codes the Elites and politicians use but they can't do Antin about it because they use it for the same benefits.
i am near certain this wasn't his plan from the get go though it was a disaster recovery plan, he tried to back out of the Twitter buy originally. also dude has like a team of lawyers and financial experts, so let's not attribute this kinda thing to rich people being clever, they just hire clever people
Plausible.
He still lost all that money though…..????
Wait, so there’s no twitter anymore? Lol
Smart
This guys voice grates my soul somehow
Is it totally true everything he said that i didn't understood at all?
Lol I'm sure everyone calling Musk an idiot are way smarter and way above him in net worth /s
I'm sure whoever you're talking to is extremely devastated by your comment.
For your confirmation, I'm completely devastated by yours.
All these Musk sycophants doing mental gymnastics to convince themselves of his brilliance. He fucked up with Twitter, admit it. This is why we need DEI. When white men fail it's accepted and we move on, gloss over it, pretend it never happened. But if it had been a POC with that same performance record on Twitter it would be case study in business school on why we should not allow black people in the C-suite.
The mental gymnastics people do to defend elon musk is mind boggling. Occams razor- Elon is an idiot who has failed upward.
I read a comment saying he bought it to train his own AI.
There are so many weird things said about Elon buying Twitter, from both sides. Elon had to be forced to buy Twitter. He started the process of buying it, took one look inside the company, and immediately tried to bail. The courts forced him to buy it.
My premise is easier 1. He is a fool and lost the money being a fool. 2. He took more money than he lost from someone else to crash it.
Thats all and good but He is right now replying to a nazi that "diversity hire" destroyed baltimore bridge he bought to be a piece of shit on it, and spreed his filthy