Breaking Update: Court Unseals Potentially Devastating Testimony-Romney Said Stocks Sold at 1/10th

[tinrobot]

53. Probably a tax dodge by Romney

IPOs are usually undervalued before they hit the market. It's a way to game the tax system.

When you undervalue a stock, you can issue stock as payment and have low income taxes for the recipient. Stocks are taxed as income on the face value of the stock. When the stock shoots up, the resulting profits are taxed at the lower capital gains rate.

Romney probably wasn't helping his friend, rather he was probably helping himself - to a tax break. I suspect he was also reporting that low valuation on his never-to-be-seen tax returns as well.

If he had given a higher value for the stock in family court, he would have had to give the same value to the IRS, and pay more taxes.

Not saying it's right, but it is what it is.... and a lot of companies do it.