To buy Twitter, Elon Musk just sold a ton of stock and made a boatload of money on the sale. But because of a US tax law quirk, Musk's stock sale could give him an enormous tax break.
Musk last month sold $8.5 billion worth of Tesla shares for more than 100 times what he paid for them . But the IRS doesn't care what Musk initially paid for the stock; it cares only what the shares were worth when he bought and sold them.Tesla's stock was going for more than $1,000 a share when Musk bought 22.9 million shares late last year, but by the time he sold the 9.6 million shares last week, the price had fallen, and he received only $883 a share, on average.
"Of course, you're going to sell the big basis shares first, and you're allowed to do so in the law," said Lee Sheppard, contributing editor of Tax Notes Federal.Tax law allows investors to pick and chose which shares they sell when they are disposing of only a portion of a holdings. And the tax experts agree that selling the shares Musk acquired through exercising options in the final two months of 2021 would be the most beneficial for his future tax bills.
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