[chx]

Just like that.

Say you invested $22 and bought one Apple stock at IPO. Thanks to splits you now hold 224 stocks each worth some $210. Let's presume you die. Your heir inherits 224 stocks at $210 and so if they sell them at $210 then no taxes are paid.

This is how the rich avoid paying taxes: the money they spend mostly comes from bank loans secured by their stocks which are only paid back by their heirs using this scheme.

[blackhawkC17]

> This is how the rich avoid paying taxes: the money they spend mostly comes from bank loans secured by their stocks which are only paid back by their heirs using this scheme.

Only a small percentage of wealthy people do this because

1) It is risky. If the stock falls too much, they get margin called and lose all their pledged shares. Natural gas billionaire Charif Souki learned this the hard way [1]

2) Many of them have privately held companies, so there's no stock to borrow against.

3) It's easier just to take dividends or salaries and use that for everyday expenses.

4) Any pledged shares must be disclosed in public SEC filings, and most public company executives don't file such disclosures (they prefer to sell shares outright).

For some reason, any finance-related thread on HN always brings out the faux accountants and tax lawyers.

1- https://seekingalpha.com/news/3549059-tellurians-souki-force...