I think @elonmusk will exercise his options for 22.8m shares, pay the necessary federal/state taxes (about 50% because it's income and not LT cap gains), and then sell all 22.8m shares via a block trade. At a stock price of $1100, he'll be left with $12.5b in cash.
@elonmusk It's also likely that the millionaire/billionaire surtax (5% over $10m and 3% additional over $25m in adjusted gross income) will be passed in reconciliation bill, so Elon will save 8% in taxes if he finishes this transaction before end of year.
Big question is what will @elonmusk do with the $12.5 billion in cash?
He probably won't want to keep it in cash for long. BTC? ETH? DOGE? New crypto? New company? TITS university? Fund SpaceX?
He probably won't want to keep it in cash for long. BTC? ETH? DOGE? New crypto? New company? TITS university? Fund SpaceX?
Elon already needs to pay taxes on the 22.8m shares to be exercised regardless if he sells them or not. If he first sells existing common shares, he'll pay taxes on those (albeit LT cap gains), and then be taxed again w/option exercise which not smart.
https://twitter.com/as1fp/status/1457547968286904323?s=20
The 22.8m shares to be exercised are from his 2012 CEO compensation plan and don't carry a requirement to hold them after exercise. He can sell them all immediately as far as I know.
https://twitter.com/pmsyyz/status/1457547766264107010?s=20
Elon had 3 choices regarding 22.8m options:
1. Exercise, borrow margin loan to pay $12-13B in taxes, keep all shares.
2. Exercise, sell 1/2 shares to pay $12-13B tax, keep 1/2 shares.
3. Exercise, sell all shares, pay $12-13B tax, keep $12-13B cash.
1. Exercise, borrow margin loan to pay $12-13B in taxes, keep all shares.
2. Exercise, sell 1/2 shares to pay $12-13B tax, keep 1/2 shares.
3. Exercise, sell all shares, pay $12-13B tax, keep $12-13B cash.
https://twitter.com/tradeteets/status/1457549685535612930?s=20
Not sure why Twitter poll was needed because in all 3 scenarios he's paying the same $12-13B in taxes, whether or not he keeps the shares or not.
The 22.8m in options are taxed upon exercise as income (37% federal, 13.3% california tax because was vested there) and not LT cap gains. No way out of this. Even if borrowed on margin to exercise all shares, still need to pay same 50.3% tax (stock price - exercise price).
Note: it appears Elon would need to pay the 3.8% Net Investment Income Tax as well, taking his tax rate on on his option exercise to 54.1%.
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