Elon Musk is selling more Tesla shares than he needs to pay current tax obligations, and experts say he's either converting part of his fortune from stock to...
DETROIT — Elon Musk is selling more Tesla shares than he needs to pay current tax obligations, and experts say he’s either converting part of his fortune from stock to cash, or he’s saving for bigger tax bills that will come due next year.
Under a compensation plan from 2012, Musk has options to buy 26.4 million shares. The options expire next year, and the tax bill will come due. Wedbush analyst Daniel Ives estimates the bill to be $10 billion to $15 billion, depending on the stock price. Musk’s options so far allowed him to buy shares at $6.24 each, and the stock is selling for around $1,080.
On Nov. 6, Musk asked his 60 million Twitter followers if he should sell some of his Tesla TSLA, +3.25% stock. “Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my stock,” he wrote. According to Musk, 58% of those who responded said yes. Musk could have cut his tax bill on the options in half if he had exercised the options and waited a year to sell the shares, Badertscher said. That’s because with an immediate sale, the gain is taxed as ordinary income. In a year, Musk would pay the much lower capital gains rate, he said.
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