Tesla CEO Elon Musk faces a tax bill of more than $15 billion, which he is likely to claim in the coming months on his investments in stock options.
Musk asked his more than 60 million Twitter followers over the weekend what they thought of whether he should sell 10 percent of his Tesla stock, CNBC reported.
“A lot of unrecorded gains have been made lately as a way to avoid taxes, so I’m proposing to sell 10% of my Tesla stock,” the billionaire said.
The CEO of the electric car company stated that he “will stick to the results of this survey, no matter what happens.” The result was 58% in favor of selling and 42% against, indicating that he will sell shares.
Beyond the survey results, Musk was likely to start selling millions of shares this quarter, due to a looming tax bill of more than $15 billion.
The billionaire was awarded options contracts for Tesla stock in 2012 as part of a compensation and financial reward plan. Since he does not receive a salary or a cash bonus, his wealth comes from such plans that include shares.
The bonus in 2012 included 22.8 million shares at a price of $ 6.24 per share, while “Tesla” shares closed trading on Friday at $ 1222, which means that his gains on the total shares are slightly less than $ 28 billion.
The company also revealed that Musk obtained loans using his shares as collateral, and with the sale of these sales shares, the man appears to be willing to pay off some of these loan obligations, according to the network.
Options contracts expire in August of next year, however, Musk must pay income tax on the gain made from them, and since options are taxed as benefits or compensation for employees, they will be taxed at the highest levels of ordinary income, or 37 % plus 3.8% net investment tax.
He will also have to pay the highest tax rate of 13.3% in California, since he acquired and mostly earned the options when he was a California resident.
That would bring the combined state and federal tax rate to 54.1%, so the total tax bill on his options, at the current rate, would be $15 billion.