What is going on with the Big Beautiful Bill?

[BigOrangeMojo]

define 'loophole'. It implies something that only a certain person has access to. I think the job is saying that is not the case.

A loophole is something that occurs that was not intended. For example, using Section 266 capitalzation to get out of the interest disallowance provisions from TCJA. (This got closed with OBBB)

99% of what is being griped about are legislative enacted preferences.

 

[McDad]

A loophole is something that occurs that was not intended. For example, using Section 266 capitalzation to get out of the interest disallowance provisions from TCJA. (This got closed with OBBB)

99% of what is being griped about are legislative enacted preferences.

Can you help me with understanding something?

The wealthy borrow money against assets in lieu of payroll. That I can understand. I can borrow money against a rental house and do whatever I want with it so long as I haven't committed fraud on the loan app.

What I don't understand is the payback. I pay taxes on money used to pay back the loan. Whether I am paying the monthly payment out of my paycheck or the rental business pays it. I can't claim it as an expense to my rental business.

So, how does this work? how do i pay a loan back with tax-free money???

 

[BigOrangeMojo]

Borrowing money isnt a loophole. People can choose to organize their finances as they see fit.

Stepped up basis at death isnt a loophole. Available to everyone.

The largest line in our federal budget isnt defense, or social security, or Medicare. We have over 2 trillion of tax expenditures annually. The bulk of these expenditures are utilized heavily by lower and middle class, only available to lower income, or partisan crap like IRA.

The difference in capital gain rates vs ordinary income rate, stepped up basis, and carried interest is less than 10% of this 2T....

 

[BigOrangeMojo]

Can you help me with understanding something?

The wealthy borrow money against assets in lieu of payroll. That I can understand. I can borrow money against a rental house and do whatever I want with it so long as I haven't committed fraud on the loan app.

What I don't understand is the payback. I pay taxes on money used to pay back the loan. Whether I am paying the monthly payment out of my paycheck or the rental business pays it. I can't claim it as an expense to my rental business.

So, how does this work? how do i pay a loan back with tax-free money???

Either you can pay loans back when you are dead or in retirement when your income might be all Roth distribution based...

 

[McDad]

Either you can pay loans back when you are dead or in retirement when your income might be all Roth distribution based...

So, I am not paying them back. My estate is. Or, I am paying them back with tax-free money.

I know for a fact no bank is going to underwrite me on no payment until 65 yoa or death, whichever comes first. But I am small time and not worth billions.

Can billionaires find banks willing to loan on those terms?

 

[BigOrangeMojo]

So, I am not paying them back. My estate is. Or, I am paying them back with tax-free money.

I know for a fact no bank is going to underwrite me on no payment until 65 yoa or death, whichever comes first. But I am small time and not worth billions.

Can billionaires find banks willing to loan on those terms?

They are backed by some asset usually. Could be 10000 shares of Apple, for example...

 

[BigOrangeMojo]

I don’t get why everything has to be left or right. There’s people on the left that abuse tax loopholes too. I am not a left wing supporter.

Your posting suggested otherwise. You were harping on the .001% of tax expenditures loathed by the left (carried interest) while completely ignoring the trillions of tax preferences/expenditures fully embraced by the left...

I have long embraced eliminated these expenditures across the board and lowering the rates for everyone . It means the poor wont get money back for breeding and filing returns. It means no stepped up basis. It means waitresses will have same tax treatment as a cook. It means there wont be carried interest. It means a salaried person who makes 80K and works 45 hrs a week gets same treatment as hourly worker who makes 80K and works 45 hours a week.

 

[Berry4Heisman14]

Your posting suggested otherwise. You were harping on the .001% of tax expenditures loathed by the left (carried interest) while completely ignoring the trillions of tax preferences/expenditures fully embraced by the left...

I have long embraced eliminated these expenditures across the board and lowering the rates for everyone . It means the poor wont get money back for breeding and filing returns. It means no stepped up basis. It means waitresses will have same tax treatment as a cook. It means there wont be carried interest. It means a salaried person who makes 80K and works 45 hrs a week gets same treatment as hourly worker who makes 80K and works 45 hours a week.

The thread is about trumps big bill. It’s not about the left. I can write a 20 page essay about why the left is crooked and corrupt too

 

[Berry4Heisman14]

My friend, you've bought into a public relations campaign with respect to loopholes. It isn't a "loophole" that people borrow money against assets. Borrowed money is not income. If it was, then every person with a mortgage would have to claim the amount borrowed and pay taxes on that amount.

You’re right that borrowing itself isn’t taxable no one’s saying taking out a mortgage should be taxed. That’s not the issue. The loophole is in how the ultra wealthy use borrowing differently than the average person. They intentionally avoid selling assets, which would trigger capital gains taxes, and instead borrow against those assets to fund their lifestyles often at super low interest rates all while reporting little or no taxable income. This lets them technically follow the tax code while paying far less in taxes than someone earning a paycheck, even if their net worth increases by millions or billions. So yes, borrowing isn’t income but when billionaires live entirely off “borrowed” money to avoid selling assets and paying taxes, it exposes a flaw in the system. That’s why people call it a loophole, it’s a legal workaround that regular people can’t realistically access or benefit from in the same way.

 

[OrangeTsar]

Don’t look now; but some loony leftist liberal lady judge has declared that Planned Parenthood continue to be funded, even though Congress (the only branch of government to control the budget) explicitly defunded it. So now, not only are these judges decreeing that the Executive Branch cannot execute laws, they are now also saying that they can override a congressionally adopted budget
You want to talk about authoritarianism? The judiciary thinks they are the sole authority in this country now. The dictators are here and they are all wearing black robes.

Judge blocks Trump from cutting off Planned Parenthood funding under "big, beautiful bill"

A judge partially froze a provision of the One Big Beautiful Bill Act just days after President Trump signed it into law.

www.cbsnews.com

 

[BigOrangeMojo]

You’re right that borrowing itself isn’t taxable no one’s saying taking out a mortgage should be taxed. That’s not the issue. The loophole is in how the ultra wealthy use borrowing differently than the average person. They intentionally avoid selling assets, which would trigger capital gains taxes, and instead borrow against those assets to fund their lifestyles often at super low interest rates all while reporting little or no taxable income. This lets them technically follow the tax code while paying far less in taxes than someone earning a paycheck, even if their net worth increases by millions or billions. So yes, borrowing isn’t income but when billionaires live entirely off “borrowed” money to avoid selling assets and paying taxes, it exposes a flaw in the system. That’s why people call it a loophole, it’s a legal workaround that regular people can’t realistically access or benefit from in the same way.

This "loophole" is still very rarely used and the cost is a miniscule fraction of paying poor people to breed via the tax code....

And its still not a loophole.....

 

[Vol423]

Don’t look now; but some loony leftist liberal lady judge has declared that Planned Parenthood continue to be funded, even though Congress (the only branch of government to control the budget) explicitly defunded it. So now, not only are these judges decreeing that the Executive Branch cannot execute laws, they are now also saying that they can override a congressionally adopted budget
You want to talk about authoritarianism? The judiciary thinks they are the sole authority in this country now. The dictators are here and they are all wearing black robes.

Judge blocks Trump from cutting off Planned Parenthood funding under "big, beautiful bill"

A judge partially froze a provision of the One Big Beautiful Bill Act just days after President Trump signed it into law.

www.cbsnews.com

That's old news (yesterday's news). It will be overturned. There needs to be a system of severe consequences to be dealt out to activist federal judges that completely ignore the law and radically overstep their authority. They should be should impeached and disbarred.

 

[OrangeTsar]

That's old news (yesterday's news). It will be overturned. There needs to be a system of severe consequences to be dealt out to activist federal judges that completely ignore the law and radically overstep their authority. They should be should impeached and disbarred.

Public shaming would be acceptable to me

 

[McDad]

You’re right that borrowing itself isn’t taxable no one’s saying taking out a mortgage should be taxed. That’s not the issue. The loophole is in how the ultra wealthy use borrowing differently than the average person. They intentionally avoid selling assets, which would trigger capital gains taxes, and instead borrow against those assets to fund their lifestyles often at super low interest rates all while reporting little or no taxable income. This lets them technically follow the tax code while paying far less in taxes than someone earning a paycheck, even if their net worth increases by millions or billions. So yes, borrowing isn’t income but when billionaires live entirely off “borrowed” money to avoid selling assets and paying taxes, it exposes a flaw in the system. That’s why people call it a loophole, it’s a legal workaround that regular people can’t realistically access or benefit from in the same way.

What's the solution which doesn't have a legal workaround?

 

[McDad]

They are backed by some asset usually. Could be 10000 shares of Apple, for example...

Are you aware of someone doing this?

And, i assume the bank's interest is capitalized during the waiting period?

Or does the billionaire default on the loan and the bank foreclose on the collateral (apple stock)?

 

[C-south]

What's the solution which doesn't have a legal workaround?

“Morality”

 

[Sea Ray]

Don’t look now; but some loony leftist liberal lady judge has declared that Planned Parenthood continue to be funded, even though Congress (the only branch of government to control the budget) explicitly defunded it. So now, not only are these judges decreeing that the Executive Branch cannot execute laws, they are now also saying that they can override a congressionally adopted budget
You want to talk about authoritarianism? The judiciary thinks they are the sole authority in this country now. The dictators are here and they are all wearing black robes.

Judge blocks Trump from cutting off Planned Parenthood funding under "big, beautiful bill"

A judge partially froze a provision of the One Big Beautiful Bill Act just days after President Trump signed it into law.

www.cbsnews.com

This is even more ridiculous when you look at the complaint:

The Defund Provision is a naked attempt to leverage the government’s spending power to attack and penalize Planned Parenthood and impermissibly single it out for unfavorable treatment. It does so not only because of Planned Parenthood Members’ long history of providing legal abortions to patients across the country, but also because of Planned Parenthood’s unique role in advocating for policies to protect and expand access to sexual and reproductive health care, including abortion.10. There is no legitimate justification for the statute

I got news for PP. Congress is not Constitutionally required to provide "legitimate justification" for defunding you. They can defund you because they don't like you, so long as they get the approval of both Houses and the President signs it

https://storage.courtlistener.com/recap/gov.uscourts.mad.286600/gov.uscourts.mad.286600.1.0.pdf

 

[McDad]

This is even more ridiculous when you look at the complaint:



I got news for PP. Congress is not Constitutionally required to provide "legitimate justification" for defunding you. They can defund you because they don't like you, so long as they get the approval of both Houses and the President signs it

https://storage.courtlistener.com/recap/gov.uscourts.mad.286600/gov.uscourts.mad.286600.1.0.pdf

It's nonsensical.

I would like to hope we can find better people to fill important positions, but have lost hope it will happen.

 

[McDad]

Are you aware of someone doing this?

And, i assume the bank's interest is capitalized during the waiting period?

Or does the billionaire default on the loan and the bank foreclose on the collateral (apple stock)?

Answer me, @BigOrangeMojo. You lazy, steve guttenberg-looking piece of crap.

Thank you.

 

[BigOrangeMojo]

Are you aware of someone doing this?

And, i assume the bank's interest is capitalized during the waiting period?

Or does the billionaire default on the loan and the bank foreclose on the collateral (apple stock)?

Aware of people using SBLOCs. That is somewhat common. Really not aware of anyone using it for a Buy, Borrow, and Die strategy. There are people who use that strategy but it is such a tiny niche where it makes sense. (Nepo baby or a founder of a public company that wants to keep as much voting control as possible).

Speaking for Fidelity, current rates are 6.25% - 8%. Callable at any time. Amount of line of credit usually will not exceed 50-70% of pledged investment account. If underlying investment account falls too much, they can force sale of asset to pay the loan...

 

[McDad]

Aware of people using SBLOCs. That is somewhat common. Really not aware of anyone using it for a Buy, Borrow, and Die strategy. There are people who use that strategy but it is such a tiny niche where it makes sense. (Nepo baby or a founder of a public company that wants to keep as much voting control as possible).

Speaking for Fidelity, current rates are 6.25% - 8%. Callable at any time. Amount of line of credit usually will not exceed 50-70% of pledged investment account. If underlying investment account falls too much, they can force sale of asset to pay the loan...

I follow. Thanks.

Can you think of a scenario where it makes sense for a billionaire to 'fund their lifestyle' with this strategy by risking 30-50% value of a pledged asset to avoid paying 20% cap gains ???

 

[McDad]

Question for @Berry4Heisman14 and open to anyone who is dissatisfied with our cap gains tax law.

I can sell a piece of investment real estate for 345k. I purchased it for 45k. Rather than paying 60k (300k x 20%) to Unkie Sam, I defer the tax indefinitely and roll the 345 into another property.

Is that a 'loophole'?
Do I have a moral obligation to pay the cap gains tax since others cannot defer income tax?
If the amounts were increased 1000x (purchased for 45M, Sold for 345M, deferred 60M in tax) does it change your answers to the other two questions?

 

[BigOrangeMojo]

I follow. Thanks.

Can you think of a scenario where it makes sense for a billionaire to 'fund their lifestyle' with this strategy by risking 30-50% value of a pledged asset to avoid paying 20% cap gains ???

Let's say Hog's kid wants to spite his dad and he moves to California. He starts an AI company called LincolnLover and it becomes a huge hit. The company becomes worth 100 billion and Hog's kid owns 60% of it. He doesnt want to lose control of the company. He doesnt want to pay 33% fed + California capital gains rate on any stock sales so he borrows 10 million a year to live high on the hog.

 

[BigOrangeMojo]

Question for @Berry4Heisman14 and open to anyone who is dissatisfied with our cap gains tax law.

I can sell a piece of investment real estate for 345k. I purchased it for 45k. Rather than paying 60k (300k x 20%) to Unkie Sam, I defer the tax indefinitely and roll the 345 into another property.

Is that a 'loophole'?
Do I have a moral obligation to pay the cap gains tax since others cannot defer income tax?
If the amounts were increased 1000x (purchased for 45M, Sold for 345M, deferred 60M in tax) does it change your answers to the other two questions?

Why csnt others defer income tax? A 1031 is pretty common...

 

[McDad]

Let's say Hog's kid wants to spite his dad and he moves to California. He starts an AI company called LincolnLover and it becomes a huge hit. The company becomes worth 100 billion and Hog's kid owns 60% of it. He doesnt want to lose control of the company. He doesnt want to pay 33% fed + California capital gains rate on any stock sales so he borrows 10 million a year to live high on the hog.

HogJr pays 7% interest (or it is capitalized by the bank), and puts up 14-20M per year as collateral on a loan instrument that is callable at any time?