ERICOPOLY

I see what you are saying, however you are making yet another mistake that makes you nothing close to 100% correct. You are assuming there was income or realized gains. There may not be either. Thus you can't claim 100% of anything. A person gets tax-deferral for holding Berkshire Hathaway stock and the tax is never due upon death. Not one penny of tax due. No dividends taxed, no capital gains tax. Nothing!

That's nearly 100% incorrect. But not entirely.. Remember basic math -- order of operations doesn't matter for multiplication. So you can pay tax today on $100,000 of IRA account conversion to RothIRA. Maybe that costs you $35,000 in total taxes paid at 35% rate. Now, if the Roth IRA account were to then compound at 10% per annum for 24 years, it would be worth about $1,000,000 in 24 years. So you could then withdraw it all tax-free. But remember that $35,000 tax bill you paid upfront? Well, what if you invested the $35,000 at a 10% compounding rate for 24 years? It would be worth not quite 10x because you had to pay taxes on realized gains and dividends along the way. But aside from that, at 10% growth rate it would be worth $350,000. So you see, the primary advantage a RothIRA has is that you tax obligation compounds tax free. There are other bells and whistles such as no forced age of withdrawals and that your heirs can inherit them... But you called it a 100% tax credit. Almost totally incorrect, but not quite... Plus, maybe Gingrich eventually wins and the income tax rate is only 10% in 24 years? In that case, you've already paid a 35% rate and you got screwed. They might go to a 10% flat tax and VAT system in the future. Or the tax rate of course could be 70%. But you just don't know. I took the gamble and paid the 35% rate.

I'm only 40 -- you can't withdraw until 59 1/2 or you get hit with penalties. They penalize me for taking money out of the tax shelter. I mean, talk about stupidity. If I'm really costing the taxpayers money then let me pull it all out penalty free instead of trying to encourage me not to.

The govt. backstopped the money in your account. There was no agreement for that either. You would have lost close to 100% of your money in your IRA account if the financial system collapsed. And they had to spend a huge amount of money for that. Now they want it back. That's not a claim you can make for all IRAs. Some people might have been invested in foreign stocks that were not at risk of collapse. If the financial system collapsed, everyone was at risk. The US dollar and the economy plays a foundational role in the world.Don't remember the days when we were waking up wondering if the number shown in our portfolios meant anything? Oh, rubbish. You could hold a foreign currency or shares in something that hoards physical gold (like what Sprott's physical gold fund does).

The govt. backstopped the money in your account. There was no agreement for that either. You would have lost close to 100% of your money in your IRA account if the financial system collapsed. And they had to spend a huge amount of money for that. Now they want it back. That's not a claim you can make for all IRAs. Some people might have been invested in foreign stocks that were not at risk of collapse.

The key takeaway is that I paid the tax bill upfront. That tax came out of my taxable account -- it was after-tax dollars. As long as I would have (instead) invested that money the same as my RothIRA, then it would be largely enough to pay the tax bill due on my RothIRA. So if they now force me to take an early withdrawal on my RothIRA for the amount exceeding $3m and tax me again on that, you ***** ****le Obama, that would be an entirely second tax on that income. Tax me once? Okay, that's fair. Twice? You go to ****. So hopefully this will be taken into account and excess to date will be withdrawn tax free and penalty free for Roth IRAs.

The argument is usually that the wife deserves to be able to maintain her standard of living "to which she has become accustomed". Well, billionaires and millionaires -- aren't they entitled to retirement spending "to which they have become accustomed"? Hence, the $200k argument is suspect. No, they aren't entitled to anything. Divorce is the dissolution of a partnership agreement between two private individuals. IRAs are a government handout with public money. Divorce settlement analogy just doesn't apply at all. It was sloppy policy in the first place to leave IRAs uncapped. That is so obvious, this really can't be a shock to anyone. Capping was an inevitability. Note to Canadians: TFSA's and RRSP's will 100% guaranteed have caps in the future. Read this to understand my point -- courts can rule that the wife deserves spousal support in line with the standard of living established during the marriage: http://www.virginiadivorceattorney.com/blog/support-me-in-the-lifestyle-to-which-ive-become-accustomed-jeffrey-d-tarkington.cfm Just because a husband is obligated to support a wife's lifestyle doesn't mean the govt. is obligated to support yours. The government isn't obligated to support mine. I put the money in the account The government put nothing into the account. I made a deal with the government where I agreed to pay my tax upfront for the Roth Conversion. They agreed to it... The arrangement is that if I then go on to lose 100% of the investment in the account, they keep my tax money -- I get no deduction or clawbacks for that. So it's perhaps an even better deal for the government than for me in that regard -- depending on how things work out. Some people really do lose money in their Roth IRAs. But every now and then a person wins at the casino and walks out with a million dollars after putting only a dollar into the machine.

Not as much as you'd think. Once we had pensions, now we have IRAs. Without the pension expenses, corporations report higher taxable profits!

Maybe this is intentional. He wants to buy back $5B worth of BAC shares as cheaply as possible, before settling with MBI. That is quite risky. Buying back shares is intended to increase shareholder value, while running more legal risks is to decrease shareholder value. How could the move be such a calculated one that he is sure the eventual result is an increase in shareholder value? If BAC is ruled to pay $40 bn in article 77, then the shareholder value will take a big hit. You didn't get that $40 bn number from me I hope. I threw that number out there not to imply that an article 77 ruling itself would force them to pay up $40bn. Rather, if they lose successor liability as well as the article 77, then BAC management might have to increase the legal reserve for settling the present $8.5bn number at a higher level. So I pulled out a totally arbitrary massive number of $40bn -- and the amount was to quiet down your alarmist claim that they would be worthless, so I showed how even an incredibly large reserve boost would still leave them nowhere near a crisis.

The argument is usually that the wife deserves to be able to maintain her standard of living "to which she has become accustomed". Well, billionaires and millionaires -- aren't they entitled to retirement spending "to which they have become accustomed"? Hence, the $200k argument is suspect. No, they aren't entitled to anything. Divorce is the dissolution of a partnership agreement between two private individuals. IRAs are a government handout with public money. Divorce settlement analogy just doesn't apply at all. It was sloppy policy in the first place to leave IRAs uncapped. That is so obvious, this really can't be a shock to anyone. Capping was an inevitability. Note to Canadians: TFSA's and RRSP's will 100% guaranteed have caps in the future. Read this to understand my point -- courts can rule that the wife deserves spousal support in line with the standard of living established during the marriage: http://www.virginiadivorceattorney.com/blog/support-me-in-the-lifestyle-to-which-ive-become-accustomed-jeffrey-d-tarkington.cfm

A couple of points about my Roth IRA: 1) I can't deduct losses against anything. So if I lose 100% of my RothIRA it's a true 100% loss. 2) I can't withdraw any of the gains to give them to my children (I can't shove it into a trust today or I'll be hit with early withdrawal penalties and income tax on the gains). Thus, the RothIRA is going to blow up the size of my taxable estate and thus I'll still be sharing it with all the masses in the end. The only way I avoid the estate tax is to leave the country when I'm able to withdraw it all tax-free. That would be age 59.5 unless these guys shift the rules on me. The so called "exit tax" only hits unrealized capital gains. But I would just be holding cash at that point. Then I can take it to Australia, renounce my US citizenship, and enjoy the fact that there are no property taxes there on primary residence and no double taxation on dividends from Australian corporations. There are no gift taxes there and no estate taxes -- they only tax the unrealized capital gains when such transfers of wealth happen. But there won't be much to tax if I do that gift soon after I'm 59.5. So here's a big middle finger to my present government if they turn it into my life mission to stiff them on inheritance taxes. They'll get less in the end.

The argument is usually that the wife deserves to be able to maintain her standard of living "to which she has become accustomed". Well, billionaires and millionaires -- aren't they entitled to retirement spending "to which they have become accustomed"? Hence, the $200k argument is suspect.

Real estate capital gains are largely never taxed for a man like Trump. They just do a 1031 exchange when they sell one property to buy another. Then you die holding onto the capital gains and your heirs enjoy the tax-free step up in cost basis. No capital gains taxes ever. The IRA at least attempts to capture this in spirit -- you sell one stock to buy the other. But none of this is income to you until you withdraw your equity from the account. So it's like a 1031 exchange (at least for the capital gains treatment of it) without the paperwork and lawyers.

Yeah, don't you have to have earned income to contribute. And then it could only grow from your own investments and contributions. Something seems off here. Variable annuities are effectively the same as IRAs and have no earned income provision for contributions. In fact there are no limits whatsoever on contributions. So you could be worth $100bn and put the entire thing into variable annuities. Thus your money would be compounding tax-deferred in mutual funds wrapped in the variable annuity policy. You can have it in managed funds, or index funds, it's all the same type of thing. And the withdrawal rules/penalties are similar to IRAs. So why is he picking a fight with the IRAs instead? So as not to piss off the powerful political allies?

Okay, do you own any stocks that have a large variable annuities business? How about AIG? Millionaires would have no interest in buying variable annuities anymore if they already have $3m in them including their IRAs and 401ks. Plus, they might be forced by the law to liquidate their current variable annuities products if they exceed $3m today.

Less cash with the dividend I believe you meant to say. Assuming a dividend tax of course. Dividend paying stocks don't have more IV. They just return cash differently. The IV of $1 distribution is $1 (before tax) no matter how you slice it. But the tax man slices it, and that's why dividends are *always worse if you pay taxes. * Unless your capital gains tax rate is substantially higher than your dividend tax rate -- and your cost basis is very very low. But nearly always it's better to repurchase shares no matter how high they trade. Usually it's only someone like Berkshire Hathaway that pays a 35% tax on capital gains versus a 14.5% tax on dividends. Oh, and how ironic it is that he is always bitching about buybacks unless the price is ridiculously low.

Here is what I do next in my RothIRA if they make this the law. 1) Keep the balance in cash at exactly $3m and never grow it (after being forced to withdraw the current excess). 2) Borrow $3m on margin in my taxable account to purchase Berkshire Hathaway 3) Hedge the margined shares with puts and write an offsetting number of puts in RothIRA Therefore, I get margin interest deduction and tax-deferred compounding. When the cash-covered puts expire for a gain in the RothIRA I have an offsetting loss in my taxable account. Better, I can be doing this margin scheme in a trust account for my kids to eliminate a good deal of my taxable estate. The problem with my RothIRA is I can't gift it to my kids without it being a taxable withdrawal. So it's an inheritance tax nightmare. And the Crummy Trust allows me to keep my kids from getting control until I determine them to be capable (like when they are 40 or something).

I am afraid I don't completely agree.. At a 150% overvaluation, isn't the company buying back a 66 cents dollar bill for 1 dollar? Which I think is rather value destructive as a shareholder of this company? I would think that buybacks are optimal as long as the stock is undervalued, fairly valued and overvalued just until the level that the tax implication on the dividend will be less value destructive than the buyback.. The company is buying what the shareholder is selling. So the overvaluation is a wash, the cash transfers to the shareholder without taxation.

According to celebrity net worth website, Obama is worth something like $11m. He's not really a socialist, rather he has made himself very wealthy from peddling socialism (his books).

I imagine the financial services lobby will be active -- there is no limit to how much you can contribute to variable annuities, which are really just tax-deferred plans like IRAs (even have similar withdrawal restrictions/penalties).

How do I vote for Romney? That guy has a $100m IRA -- guarantee this wouldn't be proposed by him.

Scenario 1: A) I buy a stock at 150% of intrinsic value B) It pays a $1 dividend and I pay 30% tax on it. C) I have 70 cents of cash Scenario 2: A) I buy a stock at 150% of intrinsic value B) It uses that same $1 to repurchase shares and I in turn sell $1 worth of shares (no tax due) C) I have 100 cents of cash So it's much better to buyback shares when stock is heavily overvalued (if the alternative is dividends).

Although, perhaps Mephistopheles had a separate argument comparing instrument to instrument? Many people, if not everyone, on the board believed that the warrants are safer than the leaps because they have 4 additional years until expiration. Eric proved that a leaps strategy is in fact safer than owning the warrants. That's all I meant. And to think a half dozen people ridiculed the notion as "silly" or "ridiculous". Hah ;) Maybe Sanjeev needs to create a "Taboo" section of the board where we can discuss the naughty topics. Oh wait, don't the naughty peep shows always tend to attract the preachers?

I believe if you have a "portfolio" margin account, hedging your common at $12 strike is the same as if you purchased $12 calls instead.

What's up with the multiply.com website? By "closed", do they mean like a bathroom break and they'll be right back? multiply.tiff