Saturday, June 19, 2010

Ralph Lauren: Canary in the Coal Mine

From TaxProf Blog, designer Ralph Lauren makes his tax move:
Reuters, the Wall Street Journal, and the New York Post all have coverage of Ralph Lauren's plan to sell a quarter of his stake in his publicly traded Polo Ralph Lauren apparel/fashion/retail empire, with proceeds estimated at between $900 million and $1 billion. The press accounts that give a reason chalk it up to asset diversification. But, as one reader-participant-watchdog e-mailed, what the press is missing is the tax angle.

On January 1, 2011, the tax rate on long-term capital gains is scheduled to increase to 20% from 15%. By selling now rather than waiting until later when the taxes are scheduled to increase, Mr. Lauren potentially saves some significant money in taxes. It's hard to say how much money without knowing what his basis is, but the savings certainly may have something to do with Mr. Lauren's decision to diversify his assets now, rather than, say, three years ago, or a year from now. ...

Lauren is among the first of what may be a massive sell off by the end of the year to avoid a 33% tax increase.

Obama supporters, the change you hoped for is coming soon.

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