ERICOPOLY

I agree, unless he is actively involved (and not all are of course) in making up laws to suit his own needs: http://www.bloomberg.com/news/2012-02-07/private-equity-lobbying-protected-romney-s-tax-benefit-of-carried-interest.html That's otherwise known as corruption, but it's legal corruption because it's not illegal to hire a lobbyist and to make campaign contributions. Only the rich can do it. So while this Facebook guy gets a nasty headline, the specific individuals organizing these lobbies to change tax laws in their own favor do not get their personal names smeared. And isn't it worse to be changing the laws to suit your own needs, using your power and influence, than it is to be just avoiding taxes by playing under the rules as they already are set? The Facebook guy could organize a lobby to have that law changed, and then nobody would be pissed at him because there would be not tax to be dodged.

You had to ask, so... 2008 2009 2010 2011 2012 2013??? 2014??? ... Very good Eric. Thanks. I need someone to perhaps keep my excitement in check. I think the excitement stems from the reality that JPM was restricted from buying back stock when the stock was in the $28, $29 range not long ago. When JPM finally got approval for $15 billion more of buybacks the stock was up to $45. Seeing JPM tumbling back to TBV excites me, but thank you for your comment. You are right, it looks like a very good deal. We have all these people sitting in cash, worried about a contraction in S&P500 profit margins, yet here is this excellent company at less than 10x P/E and operating in a low-margin environment (banking margins are squeezed by low net interest margin).

You had to ask, so... 2008 2009 2010 2011 2012 2013??? 2014??? ...

Or East L.A... Or Detroit... More than anything I believe the family determines the child's future success. Do they stress education at home? Etc... His father was already fabulously wealthy when he brought the family to Miami. Reason why he left his native land? His father discovered that his son was on a kidnapping list (the kind where they take your child and hold him for ransom). He is now a grown up... is the protection of the US still necessary? Anyhow, the US will be taxing the Facebook corporate profits. I personally believe that a corporation should be taxed wherever it does business and an individual should pay tax wherever he is resident. He "gives back" to the US through his pro-rata share of Facebook corporate tax, and he "gives back" to his country of residence through his income tax (if any, but that's their choice).

I guess that's really the crux of the matter. It is annoying that this guy isn't going to pay taxes to the US, and he is allegedly leaving in order to do so. It is however a legitimate tax loophole, isn't it? Personally I would get more annoyed by the people who find ways to pay little tax and continue to live in our society for the rest of their lives and reap whatever benefits there may be. People who live on carried interest for example, and are respected so much that they can become President of the country. Or people like me who can compound millions in RothIRAs and leave it to my kids, who can in turn keep it in there compounding tax free -- yet it is a "retirement" account (sounds more like a tax shelter). Should be fairly outrageous but because of the legality perhaps and because so many people do it, nobody here cares as much. Or perhaps there is some degree of nationalism here that is being aroused -- somebody abandoning a country that ostensibly did so much for them.

I think you are begging the question of whether he left the US solely for tax reasons.

A lot of board members here will vote for Romney. He gave money early to his children -- an amount that has grown to over $100m. Obviously, he did this only to avoid inheritance and gift tax -- you know, make sure he pays less. And he intends to keep on living here! The intent? By timing the giving of the money before it has appreciated, he intends to lessen his tax bill. Where is the outrage Moore? Are we just conditioned to think that's perfectly alright because everybody does it, but this other guy is wrong because it's something new and the media delivered it as a negative story in a leading manner? Also, I suppose I'm a bad person for converting my IRA to a RothIRA at a time when I knew the market was cheap and would soon recover. Technically I'm brazenly cheating my fellow taxpayers.

A couple of other points: 1) "exit tax" became law in 2008. Why did he wait until after it came into effect to move to Singapore and then renounce his citizenship? Insanity? 2) Assuming you are right about the IRS: isn't it better to take the capital gains hit now instead of waiting for the Bush tax cuts to expire? 3) What about the dividend that may eventually flow from FB shares? Does he want to pay US income tax rates on that which may be 35+% or so (who knows how high they will eventually go?). Does the "Buffett" tax motivate him to get out from under the US tax code? I guess I see it from the point of view of a dual-citizen. I understand your duty to pay taxes where you live, but where you don't live? Come on. 2008 is irrelvant in 2008 FB was only vallued at 5-6B his stake was worth a few hundred million, only in 2010+ did FB become a monster and did Eduardo become a billionaire. Only in 2010+ did the shares have a very liquid private market which allowed him to encumber his stake with debt from GS which makes the whole move worth it. He moved to Singapore to have another $400mm in the bank. Only "a few hundred million"... Well, most of us are worth far less than that and we think taxes still matter. You don't need to be saving $400m to consider tax planning. When is the last time anyone on this board made a trade without considering tax implications? Don't we all like the tax-deferred benefits of IRA accounts -- or only if we are billionaires?

A couple of other points: 1) "exit tax" became law in 2008. Why did he wait until after it came into effect to move to Singapore and then renounce his citizenship? Insanity? 2) Assuming you are right about the IRS: isn't it better to take the capital gains hit now instead of waiting for the Bush tax cuts to expire? 3) What about the dividend that may eventually flow from FB shares? Does he want to pay US income tax rates on that which may be 35+% or so (who knows how high they will eventually go?). Does the "Buffett" tax motivate him to get out from under the US tax code? I guess I see it from the point of view of a dual-citizen. I understand your duty to pay taxes where you live, but where you don't live? Come on.

He renounced his citizenship in September 2011 -- the IRS updated us on April 30, 2012 when it released it's list of people who have renounced their citizenship. Also, once again, he won't be bothered anymore with paying US taxes for the rest of his life as a non-resident and won't be subject to an estate or gift tax. This is so much bigger than avoiding an "exit tax".

What do you mean "for his exit". He doesn't even live here and he is still taxed. I'm a citizen of both Australia and the United States. I only pay US tax because I'm a resident here, but not there. If I move to Australia, I will have to pay taxes in BOTH countries. The US tax law on non-resident citizens is the one that's way out of line.

I understand where he is coming from. He isn't even a resident here, and one day inheritance and gift tax would have been an issue. Thus, the time to act is now. The carried interest people are probably worse -- they treat income as capital gains and hire lobbyists to protect their tax rate. This guy is just leaving, not attempting to stay and use money to change laws to suit himself.

WSJ reports that Dimon said: "This trade doesn't violate the Volcker rule, but it violates the Dimon principle." So what we need is something tougher than Volcker, we need the Dimon principle :D

I used to beg and pray that I could make 10% annualized. Targets don't have much impact on what really happens.

It's my Roth account that I have been talking about with regards to the roughly 180x return in 9 years. Unfortunately, it went down in value between 2003 and 2006. So there wasn't much there. The bulk of my retirement savings in early 2006 was in my Microsoft 401k plan. Even at the end of 2006, my Microsoft 401k plan was still the larger of the two. My last year of Microsoft they brought in the "Roth 401k" and I made all of my contributions to that one. Then I quit in January 2008 and as it stands today 100% of my "retirement" accounts have been converted to RothIRA. The really good news is that I remember how much these combined retirement accounts were worth in January 2008, and as of March 31st they were worth 10x that figure. So that's 900% return since I quit in January 2008! Quitting was an extremely good maneuver, because there's no way my Microsoft 401k would have gone anywhere at all during that time frame. On the day I quit the 401k was about 2x the size of the Roth IRA. So my retirement savings would be nearly 2/3 smaller today had I kept on working with that money languishing in the 401k. I paid the tax on the Roth conversion while a resident in Washington state (no state income tax) -- and that was smart because now we are moving to California on June 20th, a state where people regularly moan about the state income tax.

Tomorrow is shaping up to be a real bleeder thanks to JPM's mistake: http://blogs.wsj.com/deals/2012/05/10/j-p-morgan-to-host-surprise-conference-call/ Dimon says capital positions under Basel III, the all important future rules, will fall to 8.2% of risk-weighted capital from 8.4%.

How? I do have to keep the gains in there until I'm 59 or something -- after that, no tax on the withdrawal of gains. My kids are allowed to inherit the account and (under the current tax laws) can keep the ball rolling completely tax free for their entire lives. The only hangup will be the inheritance tax on the transfer. I'll bet at some point in my life the inheritance transfer thing is eliminated, and they'll probably put a lifetime cap on how much gains can be withdrawn tax-free. There won't be much outcry, because if the cap is $20m or so there won't be very many people hit by it -- or even if it's $2m.

I was reading yesterday that BAC is forgiving $150,000 in principal on average to 200,000 homeowners -- part of the RoboSigning settlement. It lowers their monthly payment size on average by 30%. That's $3b dollars. However, it's only non-performing hard-luck cases that qualify for the loan forgiveness, and I'd expect that a good portion of those loans were already written down anyhow. In some cases, you could imagine a loan having already been written down in excess of $150,000. The result would be a loan that returns to performing status and BAC could, ironically, actually mark UP the value of the loan on the books. I have been wondering how they managed to quietly ferret away the 12.5b for the settlement into their legal reserves -- this is perhaps how some of it was reserved... through non-performing loans that have been already marked down.

That would be difficult to replicate. However I only need 9% annualized gains in that account for the next 38 years to match Berkshire's record of 513,055% (which took him 47 years). I have a huge advantage as well -- absolutely zero tax.

And the quality mix of the remaining mortgage borrowers goes up as time goes by (the weakest credits fail first).

It is interesting to see an example of the low hanging fruit: "Customer letters were mailed late last week to give them ample time to become familiar with another location, including two (808 Beacon Street and 235 Needham Street) that are less than one mile away," Bank of America spokesman T.J. Crawford said. "Currently, there are seven full-service banking centers in the city (of Newton), all within two miles of one another. Based on foot traffic and other metrics, we determined that we can continue to efficiently serve our customers with one less location." "The property is in fact owned, and will be marketed," Crawford said. http://www.bizjournals.com/boston/news/2012/05/09/bofa-closing-selling-newton-highlands.html?ana=yfcpc

That totally rocks! Will you please buy my loan and then forgive it?

The people of the country should just pool their resources together and plunk down $42b to buy +50% of the company. Then they can install their own management and forgive mortgage debt in excess of $42b for an immediate gain.

I agree it's time to buy more BAC.

My RothIRA (as of March 31st 2012) was up roughly 185x "since inception", which was in January 2003 (+18,473%). $10,818 is the start balance necessary for it to be "multi-million" on March 31 (however you probably had more than 2 million in mind). Of course, I'm not sure this qualifies under "investor" -- could just as easily file it under "speculator". Since I'm a little late to the board--was that essentially from the FFH LEAPS during the short attack? (+BAC wins this year?) That was a terrific year (2006), but a lot has gone well since then: YTD: +136.25% 1 yr: +26.57% 3 yr: +83.94% 5 yr: +80.68% since inception 1/31/2003: +76.87% These numbers are as of 3/31/2012. Account has declined 17.5% since then (because of the BAC pullback).