Longtime Tesla shareholders could be on the hook for a big bill. In June 2010, Tesla went public with an opening share cost of $19. Since then, its stock has climbed to $340 or so — in addition to in which’s despite the company continuing to post losses. In 2017, Tesla had a reported a net loss of $2.24 billion, widening by $773 million in 2016.
Nevertheless, $10,000 invested in Tesla when the idea went public eight years ago could be worth close to $179,000 today. in which gain of $169,000, taxed at the top rate of 20 percent, could generate a tax bill of $33,800. in addition to depending on the investor’s total adjusted income, yet another 3.8 percent tax could be due.
While there are company structures in addition to accounting strategies in which in theory can help shift shareholders by public to private without taking a tax hit, Tesla’s size pretty much rules in which out.
“For Tesla’s size, the idea’s highly unlikely,” said JR Lanis, a partner at the Los Angeles office of national law firm Drinker Biddle. “If we were talking about a much smaller company, maybe.”
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Beyond the tax implications of staying invested with Tesla through a fund, investors should be aware of different issues.
For starters, the idea’s unclear exactly how a special fund could be structured in a way in which could allow all shareholders to stay if they want, despite Musk’s wish.
“the idea’s hard to do these types of big-dollar transactions under the best of circumstances,” Lanis said. “If you bring in smaller investors, the idea’s a coordination nightmare.”
Generally speaking, private companies are allowed to have up to 2,000 regular shareholders without triggering SEC reporting requirements. If a fund were created, the idea could be a way to sidestep the limit.
However, in in which case, experts say the investors could need to be accredited — meaning they need to have at least $1 million in investable assets excluding the value of their home or average yearly earnings of $0,000 ($300,000 for married couples).