aws

I agree it's a weird carve out. If no one changed their behavior at all as a result of the rule, then it probably benefits like a dozen people in the whole country. Mega IRAs are quite rare, and probably rarer still among those without a regular income above 400k. The few people it hits will certainly be incentivized to lower their income, if the alternative is they are forced to pay more tax due to these rules than the amount of money they otherwise would have made.

Well an unvested equity award is certainly a different animal than a venture capital investment done through a self-directed IRA. Obviously you couldn't mark the shares to zero without any reasonable basis, and it's such a niche situation that I couldn't imagine you could build a strategy around it.

Sometimes a value of zero is reasonable. It happens a lot with start-ups. People have unvested equity awards and they can elect to pay tax on them early (called an 83(b) election), and there's usually some piece of paper the company gives them that values them at zero or a penny or something. Whether that's reasonable or not is another question, but when you have something you can point to like a piece of paper from the company or those buybacks then zero is probably ok. Incidentally, I'm hoping to claim zero value on some stock I did a conversion on. I owned stub shares of a company in a traditional IRA, that may or may not have a payout of up to 50 cents per share in a year or something, but Fidelity immediately marked them to zero. And I then rolled those shares into a Roth IRA at zero, and if I don't know for sure I am going to get any payment I think it's reasonable, especially if the payment happens in a subsequent year.

I'd have to reread what they consider self-dealing, but I can't imagine how a valuation issue would trigger that. It's things like using assets owned by the IRA for your benefit, like staying in a rental property the IRA owns, or controlling a company the IRA owns. I still think Peter Thiel's initial Paypal windfall was shady, and could have easily been self-dealing, but most of the gains came after that, and he had other legal ways of bulking up his IRA if he really wanted so he probably could have replicated the same results legitimately.

The valuation issue is somewhat murky, but that's not a situation that is unique to Roth IRAs. It comes up all the time when valuing closely held businesses and real estate for things like gift and estate tax returns. You pick a value, usually apply a bunch of discounts for things like lack of marketability and lack of control, and then pay tax on the discounted amount. If the return isn't audited then it doesn't really matter, if it is, then what the agent would do probably depends on how egregious the calculation was. When I was in practice usually if you did anything that wasn't completely blatant, it sailed through an audit.

To the extent you have basis in the Roth IRA, like from the amount you were taxed on in the conversion, the distribution itself would not be taxable. It's only when you take out more than the sum of all your contributions and/or taxable conversions that anything starts to be taxed.

I've always been somewhat afraid that someday Roth IRAs would be retroactively taxed. I thought it was pretty dangerous to put too many eggs in this basket as you have to count on congress never needing some new revenue source for a particular budget and for whatever reason deciding to target Roths. They were too new of a vehicle, being around only a few years when I first started mine, and I had 40+ years to go before I could actually reap the benefits. In theory I don't mind capping benefits, as there's probably little social benefit to giving a tax deduction or exemption to people with over 10 million in an IRA, but any retroactive changes to the rules just feel wrong. It punishes people for being responsible and planning ahead to get the most out of the accounts, and can disrupt plans decades in the making. The benefits I would be ok with them limiting are removing the backdoor Roth, income capping Roth conversions again, and restrict new contributions for people with accounts above a certain limit. It's annoying, but prospective rather than retroactive changes are easier to swallow. It sounds like this proposed law will be the first retroactive taxing of the accounts, as if you're under 59.5 and they force a withdrawal, then they likely are forcing you to take a taxable distribution, as the tax-free aspect doesn't kick in until 59.5. Who knows what they are going to think of next. I know that 30 years ago they penalized you if you took too much money out of an IRA, like over 150k in a year then there was a penalty surtax on that, So it was taxed, and possibly subject to both an early withdrawal penalty and this large distribution penalty. And if you had a big account and were over 70, then the required minimum distributions would kick in and they would be forcing you to take out that money they could tax and penalize.

I was thinking about doing the SPAC stuff for the cash I am holding until my tax bills are due next year, but I was too worried about missing relevant dates and needing to read a lot of documents to capture a few percent annualized interest. Instead, I've just been shorting very far OTM cash secured puts on meme stocks with high IV. For example, a few weeks ago I shorted 1000 AMC January 2022 0.50 puts for .02 each, risking 48,000 to make 2,000 in five months, which is about a 10% annualized return, and I don't need to think about it again until January. I guess there's technically some risk here, but with all the cash they raised that doesn't seem realistic. You just have to have a broker that doesn't charge any fees for the trade as you don't have much to play with getting just $2 per contract.

Doing my part to bolster Berkshire's Q3 earnings. A week after buying a new house through Berkshire Hathaway Home Services, I bought a house full of furniture at Jordan's.

We just have to hope the share price doesn't fly too high so the buybacks always feel like good value. Luckily they'll be plenty of "new" shares hitting the market for many years to come, meaning all the shares Buffett donates and shares from estates of similarly long-term shareholders. Something like half the outstanding shares probably haven't changed hands at all in the last 50 years. That should keep the price at least a bit in check.

A new house. Paying 3x more per square foot than my last house from 9 years ago ($270/sq ft vs. $90 last time), but in this market we were probably lucky to get anything. And this was probably the most reasonably priced of the homes we offered on as most closed at more like 400/sq ft.

Wrote some GOTU Aug 2.50 puts. Very speculative, but it's a 15% return in just four weeks, and I have to think they'll still be at least some hope by then that shareholders won't be wiped out by the CCP. I've had good luck in the past writing OTM puts on absolute trash stocks like Luckin Coffee, or massively overvalued ones like GME and AMC, and hoping that streak continues.

The more apt analogy might be starting a new entity to use for a professional practice, like a consultant. At the time of the formation there's no business or assets so the entity is legitimately worth nothing no matter where you have one share or a million shares outstanding. But when you run the company you can make it worth a lot of money if you can be the professional behind the practice, especially if you take a very low salary in relation to what you are earning. So if you start this company and put the shares in a Roth IRA you can transform your sweat into tax free Roth IRA money, whereas it would normally be ordinary income. That level of control over the company is why it's quite different than just picking a winning public company or investment in a private company run by someone else. He controlled the company and could set his own taxable salary and the capital structure going forward, which dramatically affect the value of those shares in his IRA. And so he really shouldn't have been able to put the PayPal investment in the IRA, which makes all subsequent gains, no matter how legimate, fruit of a poisoned tree. Of course he should be allowed to make all those decisions, just not with an IRA investment, as that's not what the vehicle was designed for.

While the bulk of the money was probably from FB and other legit private investments, I am quite skeptical that the initial investment in Paypal followed the rules. You're not supposed to be able to buy shares at below market value with an IRA, nor do I think you are allowed to buy a closely held company with your IRA if you're the one controlling it. And if he didn't get that initial gain then he would have no money in the account for all the other investments. I do wonder if that transaction was ever audited.

That wouldn't be deductible against ordinary income, as a net capital loss is limited to a $3000 annual deduction. Also, in reference to your other post, I doubt he paid the tax on the conversion out of the account balance, as that would be considered an early withdrawal and subject to a 10% penalty on top of the normal income tax on the conversion. Not only would such a move lessen the value of the conversion, it would also make the reported $28 million tax figure all the more strange as then the implied tax rate on the conversion would have been much lower still.

The most tax efficient way, donating LTCG stock to get a deduction without ever having associated income, is limited to 30% of income, which even if he maxed that out wouldn't quite get you there. He could have contributed cash of course, which has a higher deduction limit, but then how did he have so much cash without having much taxable income? Based on his statement that without the conversion his tax bill would have been under $1 million, so he would have needed something close to $60 million of deductions plus $28 million for cash taxes, without generating enough income to get over $1 million in tax. I'm certainly not accusing him of doing anything improper, but as a CPA myself I can't help but be curious about the whole picture after seeing him give those quite unusual figures.

Based on the numbers in the letter, $70,385 in 1989 to $131 million in 2012 is more like a 39% annual return, which is absolutely incredible considering he said every investment was in publicly traded stocks at market prices. However, I wonder how his tax bill was only $28 million on a $131 million conversion. Roth conversions are ordinary income, and the top tax bracket was 35%, so it should have been more like $46 million. I can't think of any way that could have been possible if he did take all the income in a single year like he said.

If you're thinking of a strategy like that then you definitely do not want to have the options expire in the same tax year as your gain. If they hit then the profit is taxed in the same year as well, so you didn't really accomplish anything. If you buy January 2022 options on the other hand, then you have the option of selling them on 12/31/21 and taking the loss this year if they will expire worthless, or holding them until next year if they are in the money.

“The directors are in agreement that if something were to happen to me tonight, it would be Greg who’d take over tomorrow morning,” Buffett said. He praised Abel and Vice Chairman Ajit Jain, who runs all of Berkshire’s insurance operations. https://www.cnbc.com/2021/05/03/when-warren-buffett-eventually-steps-down-as-berkshire-hathaway-ceo-greg-abel-will-succeed-him.html

The cash difference is explained by the $4b liability for treasury bills they bought in March and paid for in April, otherwise you'd be counting the cash and the bills.

You have to select the specific color, which is not the easiest to find. The men's color is 044 and the women's is 483. I was in the market for a new pair soon so I picked up one for myself and my SO.

Perhaps I should have made it clearer, but I was specifically just talking about a discussion from the previous pages about a big increase in A share volume recently, not about the total A share equivalent repurchase. It was possible that Buffett was preferring to buyback A shares, even at a bigger premium, for some reason and that resulted in the higher volume of that class recently. I'm sure the overall buyback numbers you quoted are correct.

The Berkshire 10-Q is out, which shows repurchases of 4606 A shares during the quarter, and the share count dropped by another 400 or so between 3/31 and the date of the filing. So call it about 5000 A shares repurchased between 1/1 - 4/22. A much larger repurchase program than in years past, but not an exceptionally high amount of A shares to result in the much increased volume of that class, so that mystery is still outstanding. For a somewhat striking comparison, I've been reading old annual reports again recently, and I noticed in 1975 they repurchased 6,647 A shares for a total price of $432,055 during the year. Today that amount of money can get you just over 1 share, or looked at another way they spent 1.52 billion on the just 4606 A shares they repurchased in Q1. Good thing he did at least some of the buyback back then.

While I agree that we are far from the speculative excess of the housing bubble, I do still wonder how long things can stay this hot. If the price gains have been driven by cash rich city dwellers moving to the suburbs, and by record low mortgage rates for buyers with good credit, then it seems like over time more and more people will be priced entirely out of the market. I'm assuming the banks aren't going to be loosening underwriting standards too dramatically, so how is the family with the national median income of 80k going to be able to buy a house? Are we going to need to see another giant homebuyer tax credit, or expansions of low-income housing projects? If other countries like Canada have markets that are so much higher than even the US, how does anyone afford to live there if they aren't millionaires?

If any website is reporting 15 as the average daily volume, then it is obviously wrong. If you know it traded a couple thousands shares a day for the past month, then that alone would have to push the average much higher than that. I'm guessing some sites are accidentally dividing the historical volume by 1500, as though it's some error trying to keep data consistent between A and B shares. Here's a 5 year chart showing the historical volume, which in this case is monthly.