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Retirely in The things you own end up owning you,

Marissa Mayer had ONE JOB as Yahoo CEO: sell the company’s stake in Ali Baba, which is now worth more than the company itself, in way that insured the company and shareholders wouldn’t get killed with capital gains taxes

They hired an engineer to do a lawyer’s job. And if she had managed this feat of financial juggling, farking the American taxpayer out of billions of dollars, that would have been a good thing? Fark that noise. If corporations are people, too, then corporations have to pay taxes like people. They pay taxes just like people with a friend in Belgium that can stash their profits in a mattress overseas and account for their US operations as a loss. Unfortunately, we’re not allowed to have friends like that.  You need to be a holding company incorporated in Delaware with another holding company in Belgium or Luxembourg or Ireland.  But otherwise, totally just like a normal person.

“It’s a big setback for Mayer,” said Eric Jackson, founder of the investment fund Ironfire Capital, who has been agitating for Yahoo to do more to unlock the value of its assets. “This was going to be the one feather in her cap, and now it’s seemingly not going to happen.” “The fact is that the I.R.S.’s ruling is not the law in the area,” he said in a telephone interview. “It’s divorced from the law.”

If she waits long enough, Ali Baba won’t be worth anything and she’ll have no tax liabilities whatsoever. Although writing off a loss should be profitable. (NASDAQ: YAHOO) (NYSE: BABA)

Yeah, this doesn’t really sound like anything Mayer did so much as the IRS saying “fark off, we aren’t going to tell you how to weasel out of paying tax.”  Which was exactly what they should have told them.

The is a right way and a wrong way to spin off an asset you intend to sell.   If you are doing it JUST to sell it, Capital gains rules applies, if you can make the argument you thought you were “creating value” by setting up a second enterprise, you can usually get away with it. Calling the holding Company first “spinco” and then “Ali baba Holdings LLC”  Did NOT help anything IRS-wise (Not Actual Financial Advice)

Lesson here? Use Bitcoin.

the rule is that capital gains are taxed when the gain is “realized” which usually means when you sell the asset that has appreciated in value.  Which makes perfect sense, you shouldn’t be taxed extra just because something you own has gotten more valuable, if you haven’t yet gotten the benefit of that increased value.

If Yahoo just outright sold their shares of Ali Baba they’d be liable for taxes on the difference between the $1 billion they paid for $40% of the company in 2005  and the $40 billion it is worth now (and they already sold back half of their stake for $7 billion about 4 years ago)  Interestingly, Yahoo, as a whole right now only has a market cap of 29.7 billion meaning they are worth roughly $-11 billion without their Ali Baba stake.

Now if Yahoo made that stake part of a new company they created , technically Yahoo could give itself and its investors share in the New company based on their shares in Yahoo, and if the company and investors just happened to sell those shares, well there is no “gain” because the new shares have not yet appreciated in value.    The IRS is wise to this gambit however, and says you can;t create a new company SOLELY for the purpose of selling it off and ducking the taxes that way.  Yahoo tried a little fig leafing by throwing in some basically worthless bits and pieces of yahoo into the same company to claim they actually intended for it to be a going concern.  The IRS isn’t having it however because Yahoo was being a little TOO transparent in its attempts to dodge the taxes on a technicality.