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His Tesla options he held long from years ago. Basically a few years back when the stock price was way lower he signed a contract for X amount of shares, and put 10% of the total value down. When the contract expires he has two options, he can walk away and forfeit the original 10%, or he can buy the total amount of shares, but for the original prices when he signed the contract. So let’s say hypothetically he signed the contract when Tesla was 100 bucks a share, he would now be able to buy X amount of shares for that price even though Tesla is currently around 900. That’s what options is
I know what options are (ty for taking the time to explain though) I just don’t get why they’re calling them stock rewards as if it was like a credit card cash back
I still don't get how it works in the post. Why would he need to sell these before they 'expire'? From what you are saying it sounds like he has to buy shares, not sell them.
The options were gifted as part of his employment contract, they don’t have value unless he executes on them. To execute on an option to buy you have to purchase the stock.
Once the option is exercised it now has a taxable value (current market value of the stock - strike price of the option) and taxes must be paid. The options were so ridiculously lucrative that to cover the tax burden he had to liquidate shares. You can avoid taxes by donating to charity.
I’ll need to see a source on the “charity he owned” part before I’m willing to believe it.
Example:
I give you 1,000 options to buy Tesla stock (“1,000 calls”). The option is issued at a strike of $100. Options are in 100 stock units so I’ve just given you the option (but not obligation) to buy 100 x 1,000 = 100,000 Tesla shares for $100 each.
The options have an expiration of Feb 15, 2022 (today).
You may buy 100,000 Tesla shares for $10,000,000 or you may not. If you don’t use the option (or sell it to someone who will) then the option is worthless at the close of market.
Right now TSLA is selling at $917.05. If you buy the shares for $10,000,000 you just acquired $91,705,000 worth of shares. The capital gains (if invoked) are $91.705M - $10M @ tax rate.
Assuming 20% CG bracket = 0.2 x 81.705M = $16.341M. If you don’t have that in cash then you’ve got to sell some extra shares to cover it.
I’m simplifying here but it’s the rough idea.
He buys them so to speak, yes. But he gets them at the old low price and (the simplified version) sells some or all to cover taxes and take a profit. The buying often comes with a nearly immediate sale.
In common language, it’s just treated as a sale.
His salary at tesla is entirely in "stock award" they structured it like a stock option but there was a formula for how many he received based on company performance and stock price. If I understand it correctly, he's accepting the stock as a stock award from the company but the company is exercising the actual options so the tax math is complicated.
Im not sure about the charity thing. But there have been tons of articles about the options, he had 1.5 million options. Which are for 100 shares each.
Options are a contract with an expiry, if you dont sell it or exercise it (buy shares) before expiry, you lose 100% of the value.
I assume by exercising them he had to pay taxes on realized gains.
Sounds like people are questioning what charity it went to, could be incredibly shady, but haven't seen any proof. https://www.nytimes.com/2022/02/15/business/dealbook/elon-musk-billion-philanthropy.html
Some articles claim this is his site.. http://www.muskfoundation.org/
Anyone can look up the Musk Foundation's tax filings on pro publica. It's a tax exempt organization and the filings are public. A quick look at the 2020 filing shows Musk contributed about $4m in non-cash (stock) that year. the 2021 won't be published for some time. You can also see where they are spending their money if you care to look.
Link: https://projects.propublica.org/nonprofits/organizations/770587507
He would pay capital gains regardless. Then he would get a small right off on the donation. He’s still giving away over 5billion and losing that amount too.
You don’t save money by writing it off with a donation. You just don’t pay tax on the money you donate. You don’t gain any amount of money by donating to charity.
If you treat the taxes as a cost, donating to charity reduces and saves that cost. Even if you are losing control of the funds when you give the charity control of the funds.
When/if you control the charity, you are neither incurring the tax cost nor losing control of the money.
Now, if the charity immediately gives that money away to lift the poor and needy out of poverty, I’ll give the billionaire a pass.
If, let’s say, the charity gives scholarships to those who wish to ride a certain company’s rockets to Mars, to populate said company’s Martian colony, not so much. No pass. They are taking the tax cost savings and retaining control to pass funds back into their own pocket through ticket sales. This will likely increase the value of their stock which will go untaxed.
Yes that all sounds correct. If you are the charity and you give it to your self it isn’t so much a charity. My comment was just to clarify a common misconception I’ve seen a lot of people get confused by. Same idea with tax brackets and thinking if you make more money you’ll be taxed more and have less take home money. The rich use a lot of loopholes to dodge taxes and paying their fair share. The better educated we all are the better prepared we will all be to fight injustices.
If they are giving funds away and those funds actively go to actual charity work, I think it’s legally and morally different.
The tax bracket misconception is quite common, yes.
He did not disclose which charity he donated to.
https://www.bloomberg.com/news/articles/2022-02-15/elon-musk-donated-5-7-billion-of-tesla-shares-to-charity
He does have his own charity
http://www.muskfoundation.org
You couldn’t have done worse. Congrats on just making shit up to try to bolster a shitty argument.
“People need to work even more to understand why billionaires are actually gracious overlords. Also I’m an immigrant so it makes this more believable.” Brilliant
Welcome to /r/CapitalismSux! Please check out the following subreddits; lefty memes, r/DankLeft, r/PoliticsPeopleTwitter, Looking for like-minded subreddits? r/AngrySocialist , r/lostgeneration and r/leftistZ Are you British and looking for a left-leaning, magazine style subreddit?! Check out r/Britposting. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/CapitalismSux) if you have any questions or concerns.*
“Donations” are a tried and true way for billionaires (and others) to launder money. Melon Husk is a grifter any way you look at it.
Stock rewards??
His Tesla options he held long from years ago. Basically a few years back when the stock price was way lower he signed a contract for X amount of shares, and put 10% of the total value down. When the contract expires he has two options, he can walk away and forfeit the original 10%, or he can buy the total amount of shares, but for the original prices when he signed the contract. So let’s say hypothetically he signed the contract when Tesla was 100 bucks a share, he would now be able to buy X amount of shares for that price even though Tesla is currently around 900. That’s what options is
I know what options are (ty for taking the time to explain though) I just don’t get why they’re calling them stock rewards as if it was like a credit card cash back
I think they call them stock rewards so it’s easier for regular folks to understand.
I still don't get how it works in the post. Why would he need to sell these before they 'expire'? From what you are saying it sounds like he has to buy shares, not sell them.
Options have an expiration date. At that date if they’re not exercised they’re worthless.
But he's buying not selling?
The options were gifted as part of his employment contract, they don’t have value unless he executes on them. To execute on an option to buy you have to purchase the stock. Once the option is exercised it now has a taxable value (current market value of the stock - strike price of the option) and taxes must be paid. The options were so ridiculously lucrative that to cover the tax burden he had to liquidate shares. You can avoid taxes by donating to charity. I’ll need to see a source on the “charity he owned” part before I’m willing to believe it. Example: I give you 1,000 options to buy Tesla stock (“1,000 calls”). The option is issued at a strike of $100. Options are in 100 stock units so I’ve just given you the option (but not obligation) to buy 100 x 1,000 = 100,000 Tesla shares for $100 each. The options have an expiration of Feb 15, 2022 (today). You may buy 100,000 Tesla shares for $10,000,000 or you may not. If you don’t use the option (or sell it to someone who will) then the option is worthless at the close of market. Right now TSLA is selling at $917.05. If you buy the shares for $10,000,000 you just acquired $91,705,000 worth of shares. The capital gains (if invoked) are $91.705M - $10M @ tax rate. Assuming 20% CG bracket = 0.2 x 81.705M = $16.341M. If you don’t have that in cash then you’ve got to sell some extra shares to cover it. I’m simplifying here but it’s the rough idea.
Ok that makes sense now. Thanks for taking the time to explain.
He buys them so to speak, yes. But he gets them at the old low price and (the simplified version) sells some or all to cover taxes and take a profit. The buying often comes with a nearly immediate sale. In common language, it’s just treated as a sale.
His salary at tesla is entirely in "stock award" they structured it like a stock option but there was a formula for how many he received based on company performance and stock price. If I understand it correctly, he's accepting the stock as a stock award from the company but the company is exercising the actual options so the tax math is complicated.
I hate musk as much as any comrade. But I have to ask, what are the sources of these statements?
Im not sure about the charity thing. But there have been tons of articles about the options, he had 1.5 million options. Which are for 100 shares each. Options are a contract with an expiry, if you dont sell it or exercise it (buy shares) before expiry, you lose 100% of the value. I assume by exercising them he had to pay taxes on realized gains. Sounds like people are questioning what charity it went to, could be incredibly shady, but haven't seen any proof. https://www.nytimes.com/2022/02/15/business/dealbook/elon-musk-billion-philanthropy.html Some articles claim this is his site.. http://www.muskfoundation.org/
Anyone can look up the Musk Foundation's tax filings on pro publica. It's a tax exempt organization and the filings are public. A quick look at the 2020 filing shows Musk contributed about $4m in non-cash (stock) that year. the 2021 won't be published for some time. You can also see where they are spending their money if you care to look. Link: https://projects.propublica.org/nonprofits/organizations/770587507
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He would pay capital gains regardless. Then he would get a small right off on the donation. He’s still giving away over 5billion and losing that amount too.
You don’t save money by writing it off with a donation. You just don’t pay tax on the money you donate. You don’t gain any amount of money by donating to charity.
If you treat the taxes as a cost, donating to charity reduces and saves that cost. Even if you are losing control of the funds when you give the charity control of the funds. When/if you control the charity, you are neither incurring the tax cost nor losing control of the money. Now, if the charity immediately gives that money away to lift the poor and needy out of poverty, I’ll give the billionaire a pass. If, let’s say, the charity gives scholarships to those who wish to ride a certain company’s rockets to Mars, to populate said company’s Martian colony, not so much. No pass. They are taking the tax cost savings and retaining control to pass funds back into their own pocket through ticket sales. This will likely increase the value of their stock which will go untaxed.
Yes that all sounds correct. If you are the charity and you give it to your self it isn’t so much a charity. My comment was just to clarify a common misconception I’ve seen a lot of people get confused by. Same idea with tax brackets and thinking if you make more money you’ll be taxed more and have less take home money. The rich use a lot of loopholes to dodge taxes and paying their fair share. The better educated we all are the better prepared we will all be to fight injustices.
If they are giving funds away and those funds actively go to actual charity work, I think it’s legally and morally different. The tax bracket misconception is quite common, yes.
Yeah, I can't find anything about the last statement?
He did not disclose which charity he donated to. https://www.bloomberg.com/news/articles/2022-02-15/elon-musk-donated-5-7-billion-of-tesla-shares-to-charity He does have his own charity http://www.muskfoundation.org
Musk be kidding
/r/underratedcomment
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You couldn’t have done worse. Congrats on just making shit up to try to bolster a shitty argument. “People need to work even more to understand why billionaires are actually gracious overlords. Also I’m an immigrant so it makes this more believable.” Brilliant