Paul L. Caron

Friday, October 7, 2011

NY Post: 'Steve Jobs Was as Smart About Taxes as He Was About Tech'

New York Post, Steve Jobs’ Heirs to Avoid Big Tax Hit If They Sell Apple Stake Right Away:

Steve Jobs was as smart about taxes as he was about tech.

The Apple co-founder, who held $2 billion of company stock, avoided income tax on his skyrocketing share gains -- and so will his heirs if they sell the stake right away, tax experts said. ... Jobs, who held 5.5 million shares at the time of his death, received virtually all of that stock in 2006, when it was trading at $64.66 a share and was worth $325 million. Those shares were trading at $378.25 apiece yesterday.

When shares are transferred upon death, the heirs declare them at the value at which they are presently trading, not at which they were originally awarded. Jobs heirs will pay taxes only on the shares if they sell them later for a higher price than when they received them -- and then only on that rise in value, said David Miller, an attorney at Cadwalader, Wickersham & Taft.
Not all of Jobs’ wealth comes from Apple. He also holds $4.4 billion of Disney shares. Jobs is survived by his wife Laurene and their three children.
Moreover, if Jobs willed those shares to his wife, she will not pay any estate tax at the current 35 percent rate, unlike if he had passed them on to his kids, said USC Professor Edward McCaffery.

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It's not so much that Steve Jobs was smart about taxes as it is that his tax advisor(s) are smart about taxes. At best, he was smart about deciding to retain tax advisor(s) and perhaps smart about retaining smart tax advisor(s), though as the real anon points out, there's not much very sophisticated about what is being described. Even students in the basic tax course understand these principles.

Posted by: Jim Maule | Oct 8, 2011 6:27:57 AM

If only there was some other tax out there to account for the ability of the heirs to "declare them at the value at which they are presently trading".

And if by being "as smart about taxes as he was about tech" the author means doing no planning other than not selling the stock for a gain while he was alive, then i guess.

Sounds like the author just now learned a little bit about how estate tax works.

Posted by: the real anon | Oct 7, 2011 1:31:30 PM