alt.hn

3/19/2026 at 5:16:36 PM

How to defer US taxes

 https://taylor.town/succession-000

by surprisetalk

3/19/2026 at 7:32:24 PM

> Loaned money isn't taxable income, so you can save/spend it without affecting your tax rate.

> Death is a popular escape from deferred taxes. When you die, your obligations to the government vanish. Your heirs inherit assets/property at market value. Their assets depreciate from new cost bases.

The article talks about taxes in the USA, and I think the treatment of taxes at death is unfair by giving a significant tax advantage to people who hold assets till death, especially with the step-up basis. The way Canada handles it seems more reasonable to me:

> Capital property generally includes real estate, such as homes and cottages, investments like stocks, mutual funds or crypto-assets, and personal belongings like artwork, collections or jewelry. When a person dies, they are considered to have sold all their property just prior to death, even though there is no actual disposition or sale. This is called a deemed disposition and may result in a capital gain or capital loss

-- https://www.canada.ca/en/revenue-agency/services/tax/individ...

In exchange, Canada does not have an inheritance tax. All taxation is resolved in the estate of the deceased person before the money or assets are passed on without further taxation.

by nayuki

3/19/2026 at 8:56:11 PM

It's two sides of the same coin. Imagine a simple example:

Mom and dad buy a house for $100,000. When they die it's worth $1,000,000. In Canada, you'd pay gains on the $900,000 difference. In America, you'd pay inheritance tax on the full $1,000,000 (but no capital gains). So in America you're paying tax on a little bit more (I'm of course ignoring the cap gains baseline exception).

But the reason America does it the way it does is because imagine it's not a house but a piece of art that mom and dad bought 50 years ago. No one know how they got it or what they paid for it. How does Canada even reconcile such a thing? How can you pay cap gains on it if you have no idea what it cost and no one is alive to even help you guess?

by jedberg

3/20/2026 at 4:48:02 AM

This seems trivial? Just like any other asset when you are alive, if you cannot establish a cost basis it’s assumed at $0.

Easy stuff. If your benefactors care about taxes on their estate they will properly document capital assets. If not? Oh well. It was a windfall gain either way.

This is such a non-issue given the inheritance/gift tax limit being so high I don’t understand why it’s ever talked about.

It’s also not as onerous as people assume. I’ve established cost basis 15 years later on an asset I had no paperwork for by simply looking up the daily average price for said asset when I knew I acquired it. This can even be used for stuff like buying an expensive retail purchase - just use advertised retail cost. The IRS allows broad leeway so long as you are consistent and can explain your reasoning.

by phil21

3/19/2026 at 10:54:20 PM

This year, the first $15,000,000 of an estate is exempt from federal taxes, so unless it is on top of a different $14,000,001 in estate net assets, the estate tax (a tax on the estate) on that $1,000,000 house is $0. [0]

Some U.S. states have an additional inheritance tax (payable by the inheritors). Those rules vary. [1]

[0] https://www.irs.gov/businesses/small-businesses-self-employe... [1] https://www.investopedia.com/terms/i/inheritancetax.asp

by thyrsus

3/20/2026 at 1:28:07 PM

This fact has me foaming at the mouth rn.

by alphawhisky

3/19/2026 at 10:07:09 PM

The question is not whether the alternative is perfect, the question is can it be made better than the status quo. It’s not that hard to come up with potential mitigations for the problems you state.

- A taxable threshold, so people who can’t afford lawyers and accountants don’t need to deal with it. Works well for family gifting.

- You don’t need to tax immediately, tax it when it the profit is realized, eg. When you sell that art.

- Taking out a loan against an asset at an increased valuation should trigger a taxable event. (Eg. Stocks go from 1b to 2b valuation and you take out a 500m loan. You are realizing 250k of gains and should pay tax on that gain.)

- Eliminate stepped up cost basis. This is a ridiculous give away.

by dwallin

3/20/2026 at 2:27:15 PM

This seems like the key.

You don’t suddenly owe taxes you maybe can’t afford when inheriting the family house.

You can afford those taxes when selling it for a massive profit so you should owe then. Likewise for realizing gains by taking a loan

by pythonaut_16

3/19/2026 at 9:28:50 PM

Easier than you'd think.

The value of homes is very well known and assessed annually in many provinces (some have weirdly become laggards). So no real problem there.

Any piece of art that is of any real value would have a provenance and it would be very well known what the value it was at any given time and at sale. If no one knows the artist or can determine the value it is very safe to say its value is nil.

by Tiktaalik

3/19/2026 at 9:36:50 PM

It's really not that easy at all. Especially with art or jewelry. We can know the current value. It could even be a very famous piece of art.

But these types of things are found all the time in attics and basements. Art especially is moved around without sales records all the time, and jewelry even more-so.

Heck, I have things I bought myself that I have no idea what I paid for them.

But I'd sure be upset if I had to pay cap gains taxes on these things assume their prior value was zero.

by jedberg

3/20/2026 at 2:56:04 AM

House purchase price might be easy to determine; although old records aren't always great; certainly the price paid indicated on the front of the deed is often a formal requirement value, not the actual price, so hopefully the real price was written down on the recorded deed too. I wouldn't rely on assessed values, at least without a lot of cross referencing many jurisdictions setup assessments so that they reflect market value, but jot directly.

On the other hand, cost basis in a house is not just the purchase price. Many improvements add to the cost basis, and good luck finding records to support that. Especially for a home owned by your parents since the 1970s.

That doesn't make it equitable to step-up on death; but it does make it very convenient.

by toast0

3/20/2026 at 4:17:45 PM

yeah it's not perfect, but there's absolutely well enough data for the ballpark appraisal. Onus is not on the government to do any of this. So keep records folks.

I think the government now actually does keep tax records of buying and selling homes (became a bit of a question during the foreign buying debate) so going forward it's going to be no concern.

by Tiktaalik

3/19/2026 at 9:24:10 PM

Wow this is a great question. How does this work? +1

by pinkmuffinere

3/19/2026 at 8:23:59 PM

Alberta doesn't have an estate tax either, only a capped probate fee of (I think) a couple hundred bucks.

by skeeter2020

3/19/2026 at 8:39:39 PM

Why should the government collect taxes on jewelery I pass down to my children? I already paid income taxes on the money I used to buy it and sales tax at the point of purchase. Why the hell are they entitled to more?

by richwater

3/19/2026 at 10:12:32 PM

Why should your children not pay tax on the valuables that they acquired without any work, when everyone else has to earn money and both pay income tax and then pay sales tax to acquire the same jewellery?

(And you don’t enter into the equation. You are dead by the time the taxation happens.)

by MagnumOpus

3/20/2026 at 6:44:29 AM

Why?

Because their parents already bought and paid the taxes.

by refurb

3/19/2026 at 8:43:55 PM

I'm not an accountant or tax lawyer (in fact, I'm not any kind of lawyer). My layman's understanding is that value -- from goods and services -- is taxed when it moves between legal entities, be those people, estates, or corporations. This is not a prescriptive legal framework as far as I know, but is a descriptive framework which I have observed and which makes sense to me morally.

You paid income taxes on the money when you earned it because it left your employer's pocket and went into yours: the ownership of the value (money) has moved. You paid sales tax when you bought it because you exchanged money for the ring: the ownership of value (money, and a ring) has moved. And you pay an estate tax on it when it transfers from your estate to your children because, you guessed it, the ownership of value has moved.

by OfficialTurkey

3/19/2026 at 8:51:02 PM

To prevent royalty. That is literally the reason. To prevent family dynasties.

by jedberg

3/20/2026 at 5:49:05 AM

It’s terrible at that. Rich people are very good at passing down wealth, even in high tax environments. They just move abroad for a bit.

They also pay for education and use networks and names to get their kids jobs and status.

by pyuser583

3/19/2026 at 10:12:41 PM

How do you feel about gift taxes?

by dataflow

3/19/2026 at 8:05:15 PM

Why is the Canadian approach fairer?

by CGMthrowaway

3/19/2026 at 8:12:11 PM

If I understand correctly, the "buy borrow die" strategy of tax avoidance hinges on these aspects of the tax code: Buying an asset is not a taxable event. Holding onto an asset and letting it appreciate is not a taxable event. Borrowing money is not a taxable event. Holding an appreciated asset until death will step up its cost basis to the current market value (thus erasing any capital gains taxes), and it can be passed on but large amounts will trigger inheritance taxes.

by nayuki

3/19/2026 at 8:14:54 PM

Yes but why is the Canadian approach more fair than the US approach?

by CGMthrowaway

3/19/2026 at 8:37:38 PM

In the Canadian approach, as I understand it, all capital gains taxes are assessed upon disposition; including disposition at death.

In the US approach, capital gains disposed at death avoid capital gains taxes.

Here are two similar scenarios where the difference in actions is small, but the difference in net estate distributed to heirs is large.

Both scenarios: Parent P buys (split adjusted) 100,000 shares AMZN on Jan 3, 2000 at close for $4.47. Parent P has no other assets.

Scenario 1: Parent P sells March 9, 2026 at close for $213.49 per share; realizing $209.02 in capital gains per share, ~ $20.9M capital gains, $21.4M proceeds. Parent P dies March 10, 2026. If cap gains tax is 20% uniformly (which it isn't), ~ $4.2M goes to income tax, the estate at time of death is $17.2M. If estate tax is uniformly 40% of amounts over $15M (which it isn't), the estate tax is about ~ $0.9M, and the net estate is $16.3M

Scenario 2: Parent P dies March 10, 2026, without selling. The estate promptly sells at close for $214.33. $21.4M proceeds, ~ $20.9M capital gains, but no capital gains tax is due. Again assuming 40% estate tax over $15M, estate tax is $2.6M and the net estate is $18.8M

How is it fair for the heirs of Parent P in scenario 2 to get so much more than in scenario 1 when the circumstances are so similar?

If you use actual tax brackets, you could make the example numbers more accurate, but I don't think it will change the results significantly.

by toast0

3/20/2026 at 6:31:36 PM

Have you considered these factors when considering fairness..?

  1) Many estates contain illiquid assets- family farms, small businesses, etc. Forcing a deemed disposition at death can force heirs to sell just to pay the tax bill

  2) Death isn't a voluntary transaction, and cannot be forecast well, so we are essentially creating an arbitrary tax event/hardship

  3) Determining original cost basis across decades of an ancestor's holdings can create an enormous administrative burden for heirs

  4) Bunching all accumulated gains in a single year at death will push the estate into an artificially high marginal tax bracket

  5) Taxing gains at death discourages long-term wealth building and pushes people toward consumption instead of investment

by CGMthrowaway

3/20/2026 at 7:33:09 PM

IMHO, these are reasonable things to consider, and I acknowledge the hardships. However, my opinion is that similar circumstances leading the similar outcomes is the most fair, and wiping out unrealized capital gains at death can easily result in similar circumstances having unsimilar outcomes.

Specific suggestions or responses to your list:

1) Reasonable alternatives to assessing capital gains tax, due immediately exist. The cost basis could be transfered, as in a gift while living (point 3 applies however); or the tax could be assessed and recorded as a lien on the property, possibly with payment over several years.

2) Death isn't generally voluntary or scheduled or easy to predict a specific date. However, it is easy to forecast that everyone alive today will die at some point. No specific advice other than planning for your estate is something people should probably do once a decade or so.

3) I agree. Especially with assets like homes where cost basis isn't simply the purchase price but also includes improvements. At least for stocks and mutual funds, record keeping requirements for brokerages changed so they have to keep cost basis information in most cases, which helps a lot; but doesn't help for real estate or other capital assets. This is a hard one, and I recognize the value that a step up in basis provides, but I still find it unfair.

4) Yes. It would be nice if there was a way to spread capital gains over many years; not just for the deceased. Perhaps a carryback or carryforward. Or an enhanced 0% capital gains bracket for the deceased or for property disposed upon death; possibly with a carryback to help those who sold capital assets to pay for multi-year end-of-life care and etc.

5) Certainly, avoiding capital gains tax by dieing with unrealized capital gains is an incentive to not sell capital investments. I don't know that it encourages wealth building. Incentivising people to not sell things with unrealized capital gains at end of life causes problems for people too: waiting to sell someone's house, even though they moved into a care home and will never move back distorts the housing market; many people refuse to spend their savings, even when adequate, and instead rely on financial help from relatives or suffer hardships from lack of spending.

by toast0

3/19/2026 at 8:31:34 PM

Because wealthy people can perform buy borrow die and poor people can't, artificially amplifying generational wealth differences.

by fer

3/19/2026 at 8:35:38 PM

You don’t have to be wealthy:

Homes get a step up basis on inheritance like any other capital asset, and home equity loans are quite popular.

Less common but not obscure financial options include borrowing against your 401(k) or other equities.

by twoodfin

3/19/2026 at 8:40:24 PM

401k and home ownership count as "wealthy" in many circles. It's not "I can do whatever I want any time" wealth, but it does still mean "this is not an option for people who likely need it the most" which is the real issue.

by Groxx

3/19/2026 at 8:56:51 PM

How are income taxes a serious burden on “people who likely need it the most”?

Those who truly need it the most are typically well into the plus column on government transfer payments: On net, the government is paying them far more than they’re paying it.

by twoodfin

3/19/2026 at 8:48:00 PM

Talking about homes: if a wealthy person see a depreciation of the equity they have a parachute (more homes, stocks, etc), if middle class sees a depreciation of the equity they're on the street. The risk profile is absolutely not the same.

by fer

3/19/2026 at 7:49:03 PM

Well, except for that pesky "inheritance tax" thing, which definitely affects people who have net worths that hit multimillion levels.

by trollbridge

3/19/2026 at 8:06:57 PM

Sure but would you rather have an inheritance that gets you to pay that tax or one that doesn't?

Because getting a multi million dollar inheritance isn't something a typical person would feel sad about I would think

by hvb2

3/19/2026 at 6:17:45 PM

Pretty good overview of how/why these deductions reduce your taxable income. Couple of things to note.

Depreciation is recaptured if you sell an asset for more than its depreciated basis. People sometimes get into trouble with this if they rapidly depreciate real estate and then sell it. Even if you sell for less than your purchase price it is possible to owe taxes.

You also aren't going to be able to pay no taxes since you do need to realize some income to pay for mortgage/rent, food, transportation, etc. I guess if you had assets you could borrow against it would be possible to pay for these using the loan proceeds (which are not taxable).

by jeffreyrogers

3/19/2026 at 7:52:54 PM

>People sometimes get into trouble with this if they rapidly depreciate real estate and then sell it. Even if you sell for less than your purchase price it is possible to owe taxes.

But in the U.S. you can't rapidly depreciate real estate, it is generally straight-line over 27.5 or 39 years (residential vs. non-residential). The gain on real estate due to depreciation is technically referred to as Section 1250 gain, and if there is no gain (which is calculated against your adjusted basis, not purchase price), then it follows that there is no Sec. 1250 gain (often mistakenly called "depreciation recapture").

by PopAlongKid

3/19/2026 at 8:10:04 PM

No, you can do cost segregation to classify some of the real property as Section 1245 (which is accelerated vs Section 1250). People doing this and then selling is how they get unexpected tax bills.

by jeffreyrogers

3/20/2026 at 1:11:33 PM

Most of the time 1245 property is not real property, it is personal property, which is why I didn't mention it in this context.

by PopAlongKid

3/19/2026 at 9:48:53 PM

The “unexpected tax bill” usually comes from people not realizing they pulled those deductions forward earlier.

Also worth noting, if you don’t sell (or you 1031), that recapture can be deferred, which is why a lot of investors still use cost segregation aggressively.

This is a pretty clear breakdown of how 1245 vs 1250 recapture actually works on sale if anyone wants the full picture:

https://notaxcompromise.com/cost-segregation/depreciation-re...

by MichaelFeldman

3/19/2026 at 8:10:35 PM

Cost seg

by CGMthrowaway

3/19/2026 at 6:44:39 PM

The thing I don't understand with these loan arguments is: don't you eventually need to pay taxes in the income you use to repay the loan? It seems to me that folks who take out such loans are just kicking the can down the road.

by gautamcgoel

3/19/2026 at 6:58:58 PM

There are a bunch of strategies here, but one people oft repeat is the "buy, borrow, die" approach. Where, they are kicking the can down the road, but the magic happens at the die step. When the borrower dies:

Your heirs inherit your stocks, with their cost basis reset to the current price. This means that they have zero appreciation of your purchase of $RIVN at $67, despite it being at $420. They can then sell the shares, to pay the loans, and not owe capital gains, because there are no gains. Additionally, at this step cash can be extracted for no gains as well if desired.

So you avoid taxes while alive by taking loans (not income), avoiding capital gains (never selling), and then gains evaporate through a stepped up basis. There are some exceptions here - estate taxes, etc with ways around them like trusts, but this is the general mechanism.

Its worth noting though, that its not ironclad. In a significant downturn you can be forced to liquidate and it will hurt (see the news on Musk right after X purchase). Additionally, while people talk about this as being super popular, realize that in practice people who take advantage of these strategies also still have millions in cash flow, so its not a true borrow only $0 tax lifestyle, they will use already taxed money to manage them as well.

by claythearc

3/19/2026 at 7:06:28 PM

Minor nitpick. The step up in basis actually happens when you die (not when your heirs receive the assets), and your estate has to pay off creditors before distributing assets. So the debt is paid off first, then your heirs get whatever is left over. Net result is the same though.

by jeffreyrogers

3/19/2026 at 7:06:14 PM

I'm familiar with this strategy but there's one thing about it that I don't understand: After death, the loans are an estate liability, right? Doesn't the estate need to be settled before heirs get their inheritance? If i had an outstanding $1MM loan, wouldn't the estate need to liquidate some of that $RIVN at the $67 basis in order to pay the loan? and then whatever $RIVN was left over would go to the heirs at a stepped-up basis?

by avemg

3/19/2026 at 7:07:45 PM

The step up in basis happens when you die, so the estate has no capital gain. Then the debts are paid, then the heirs get whatever they're supposed to get.

by jeffreyrogers

3/19/2026 at 7:13:03 PM

Ok thank you. That was the key to my misunderstanding.

by avemg

3/19/2026 at 7:14:43 PM

I conflated the two, since it all happens pretty quickly, but the estate is actually the recipient of the updated basis. So the estate sells @ current price, pays the negligible difference on gains from appreciation while the estate settles, if any happened, and then passes out the rest.

by claythearc

3/19/2026 at 7:04:18 PM

When the cash flow from the assets exceeds interest expense, you've cashed out the assets without incurring tax on your appreciated position and you can afford to pay the interest. As for principal, debt is largely not paid back these days, especially large bespoke debt secured by liquid and well-defined assets. The debt holders (lenders) get paid back after death of the borrower or they continue rolling the position and collecting their return (interest income). The only question in the lender's mind is how much leverage to grant on the underlying assets, e.g. blue chip stocks, and what to do in a liquidity crunch when rolling.

by throwaway667555

3/19/2026 at 6:54:49 PM

The strategy is called "Buy, Borrow, Die"

https://www.theatlantic.com/economy/archive/2025/03/tax-loop... (viewable by disabling JS)

by gamerdonkey

3/19/2026 at 7:19:00 PM

What if I live for, say, decades before dying. Surely the lender expects some some amount of repayment before then.

by xienze

3/19/2026 at 7:35:11 PM

Lenders have an amount of capital that they need to invest and earn returns -- they're generally not in the business temporarily so they don't want their capital back. And when the loans are secured by hard assets, e.g. publicly traded stocks, there's little risk of default so long as the price stays up. In times of rising stock prices, there's little to no reason for a debt holder (lender) to exit their positions at maturity. Rather roll and continue taking the return (interest).

by throwaway667555

3/19/2026 at 8:07:15 PM

I don't know how these specific loans are structured but in real estate it's relatively common for a loan to be interest only with a balloon payment (the principal) due some number of years in the future. So in theory you could just pay off the balloon payment with a new loan and repeat the process.

by jeffreyrogers

3/20/2026 at 4:57:50 AM

Lines of credit against assets are typically interest only, interest rate pegged to however many basis points above the current fed fund rate.

There is no balloon payment ever due if you simply pay off the interest indefinitely.

Of course there is always the possibility of a margin call against the loan where if you lose X% of value on the securing asset you may be liquidated of it and the proceeds used to pay off said line of credit.

There are a million caveats and different loan structures so I’m sure some finance bro will be along to correct me shortly. But overall for normalish folks this is more or less the correct mental model.

by phil21

3/19/2026 at 6:50:53 PM

You do. I think these loans are generally used for short term liquidity. For example if you want to buy a new house before selling your old one. You'd get a loan against your assets, buy the home with the loan proceeds, sell your old home and pay off the loan.

If your assets are growing faster than the interest it would also be possible to payoff the loan with a new (larger) loan, so you are still kicking the can down the road but eventually you would die and never need to pay the taxes while you were alive. I doubt this is done that often in practice, but who knows.

by jeffreyrogers

3/19/2026 at 6:51:17 PM

As mentioned in the article, death (and subsequent inheritance), solves this problem. Once you're dead, your tax situation changes significantly, and selling your assets to settle your debts is subject to estate taxes, not capital gains.

by OkayPhysicist

3/19/2026 at 6:53:14 PM

Sometimes its about the layers.

I.e. what kinds of loans can be tax deductible? To be clear theres decent effort into this, you can't just do a cash-out refi on a home, but loopholes exist for those who find it worth the effort.

by whaleofatw2022

3/20/2026 at 2:59:51 PM

Investment interest is deductible like mortgage interest

by anon291

3/19/2026 at 6:55:57 PM

A margin loan typically does not require any payments at all other than interest. Many loans are like this. Amortization for principal repayment is usually something you only find in personal or real estate loans

by anon291

3/19/2026 at 6:52:38 PM

You repay with another loan. Repeat multiple times. And then you die.

This is the strategy that people follow.

by nout

3/19/2026 at 8:36:58 PM

This is exactly why many people became landlords, but changed their mind and found that there is no way out. You might decide one day to buy some investment property, but after a few years when you lost interest in the pursuit, quitting would actually give you a huge tax headache in the form of unrecaptured section 1250 gain. This is unfair. You can quit a W-2 job or a hobby without tax consequences.

by kccqzy

3/19/2026 at 9:36:18 PM

Hard to sympathize with the landlord class too much on this one. Everyone knows how depreciation schedule works and gets in to it in no small part because of that deduction benefit + the hopes that via 1031 exchanges etc they can delay it until death.

by jcdavis

3/19/2026 at 9:45:11 PM

> Everyone knows how depreciation schedule works

Everyone is way too strong a word. Unlike a regular job, there is no course or qualification needed to become a landlord. In the Bay Area I know lots of people in tech who bought a house, couldn’t afford mortgage payments (perhaps after a layoff) and decided to rent out parts of their house. Or perhaps just a particularly smooth talking real estate convinced someone to sell their stocks and buy investment property.

You might say that not knowing about all housing related costs upfront is evidence of financial illiteracy. You might also say not knowing about depreciation before buying a house is also evidence of financial illiteracy. You might even say committing to a mortgage payment while your own job prospects disappear is evidence of bad risk management. But in real life many people make bad financial decisions, landlords included. Landlords do not inherently have more financial aptitude.

by kccqzy

3/19/2026 at 10:14:00 PM

I'll agree that "everyone" is probably an unfair characterization. But the tax benefits of depreciation are wildly touted among real estate investors.

If they didn't claim depreciation in prior years they can still get it via Form 3115. Yes this is complicated/annoying to do (almost certainly need a CPA), which you can argue is unfair, but I'm still going to have limited sympathy for anyone DIYing in this space without talking to a professional.

by jcdavis

3/19/2026 at 9:46:42 PM

Buying an investment property isn't a job. It's an asset, that possibly generates income. That is not a job. That's an investment.

A W-2 job isn't an investment. It's a job.

A hobby isn't a job or investment, it's a hobby.

You absolutely do have tax consequences if quitting the hobby involves selling equipment, particularly if that equipment was something that has to be registered, like a boat, car, ATV, etc.

by KennyBlanken

3/19/2026 at 6:04:47 PM

I'm not sure to understand how deferring taxes is a better deal than paying it here and now.

Since I'm not a financial adviser, someone asked me take on which 4k projector to buy last Xmas.

I explained that the tech has improved so much lately, they've become somewhat affordable, I recommended a model and pointed ou that he would certainly get a better device next Xmas, for half the price. I thought he would follow suit given his budget was a bit below the retail price. That would just wait.

His response was he would rather go ahead and up the budget a few hundred dollars to get it right away. That projectors will surely get much better by next year, but that he, certainly, will not.

by hirako2000

3/19/2026 at 6:19:11 PM

Deferring taxes is essentially an interest-free loan from the government to you. You can take that money, invest it, and then keep most of the earnings when you eventually pay the taxes.

There are also some loopholes where capital gains taxes deferred until after death just don't get paid at all. This is the "step-up basis" where your inheritors get to reset the basis of capital assets and neither you nor they has to pay taxes on the capital gain.

by singron

3/19/2026 at 6:47:50 PM

This is what they call "buy borrow die" or some such. Buy an asset, borrow against it, die to reset the basis. Your estate will still have to repay the loans, but... that one part I don't really understand. Do they just refinance, taking a new loan against the newly valued asset?

This all seems to benefit from low interest rates. Was it a thing in the 90's? Or even the 80s when rates were much higher?

by phkahler

3/19/2026 at 7:34:27 PM

It's a strategy that's only really available to the ultra wealthy, because the banks are willing to give them a bespoke loan with a much lower interest rate that's payable after they die. There's also a complex trust setup to pass the asset to their heirs.

by dminor

3/19/2026 at 7:44:42 PM

These laws are the way they are so that if a kid has their parents die they aren't facing an immediate giant tax bill on cap gains. It applies to basically anyone inheriting even a normal house. The difference in cost basis could be 90% of the value.

by hparadiz

3/19/2026 at 8:22:37 PM

You only pay cap gains if you realize gains, so you would only face a huge tax bill if you had a pile of cash dumped on you. E.g if you inherit a $1M house and sell it, and the IRS thinks you own 20% taxes on $900,000 of gains, then you have $1M of cash on hand to pay $180K in taxes.

(Also, if you live in the house for 2 years and then sell it, you can exclude $250K-$500K in gains, but that has nothing to do with inheritance).

by singron

3/19/2026 at 8:59:00 PM

It would depend... elsewhere on thread, someone says Canada treats death as disposition, and capital gains tax is due for a transfer on death.

Family farms are the sympathetic example of choice. Let's say your parent's family farm, that they started from nothing in the 1950s is now worth $20M. If you have to sell it to pay the taxes, because the estate doesn't have $4M to pay capital gains tax, plus $2M for estate taxes, then another family farm goes corporate.

Maybe you can inherit the capital property at the original owner's basis... then you'd only owe the cap gains tax if you sold it, and you'd have money to pay it because you sold it. That could work... although one nice thing about the step-up in basis on death is that nobody has to dig through to find the old records to establish basis when there's a clearly established death instead.

by toast0

3/20/2026 at 6:10:05 PM

Its not like there can't be exceptions or carveouts. Its disastrous to treat that as representative of every dynastic transfer of accumulated wealth

by Obscurity4340

3/19/2026 at 6:30:23 PM

Yes, and when you do pay it's a lower "real" tax (due to inflation)

by dsizzle

3/19/2026 at 10:33:53 PM

If I have X dollars and get taxed such that I have X * T after the taxing, say T = (1 - .20), then I invest and that money grows by a factor, say G = (1 + .50), over the years, then in the mean time inflation hits and reduces my money by a factor, say I = (1 - .10), so that what I end up with in the end is F = X * G * T * I. If instead I invested and grew and inflated and then got taxed, X * G * I * T, it would be exactly the same. Multiplication is commutative.

What you are doing by delaying taxes is hoping you have a lower rate later. Say you make less in retirement or die untaxed and your kids get a step up in basis. But without a change in rate (which might go up even), there’s no difference.

by onedognight

3/20/2026 at 3:00:24 PM

If you take a loan against your larger capital pool, inflation helps you (to the extent it wasn't incorporated in higher lending costs).

But yeah that's a second order effect. There aren't really any scenarios where you have a fixed nominal tax that can be deferred without locking up the money, so I think you're mostly right that it comes back to lower tax rate and step-up.

by dsizzle

3/19/2026 at 8:40:05 PM

Good point about inflation. Deferring can make sense. I was thinking what we earn today is more enjoyable to spend today than when we have bad knees and whatnot.

by hirako2000

3/19/2026 at 6:56:26 PM

This is touched on briefly, the number one reason is that if you can keep deferring your taxes indefinitely then you never have to pay them. Your tax burden is wiped away on death so not only does it not matter to you but your heirs won't be affected either.

by some_random

3/19/2026 at 6:21:39 PM

Not sure I understand your example. If you always wait for the new version of a product to release the following year then you are never going to buy anything.

by paxys

3/19/2026 at 6:31:33 PM

but you'd wait only long enough for a version that's good enough, not forever.

by numbers

3/19/2026 at 6:43:32 PM

In addition to the other reasons given: Sometimes it also makes sense if your income is lumpy and you e.g. expect to have years where your income will fall into a lower tax band. It then can pay to suddenly recognise more income to take out as much as you can within the lower band.

by vidarh

3/19/2026 at 6:35:12 PM

Suppose I defer $1 million in taxes until after I'm dead, and my estate conveniently does not have $1 million in assets left. What happens?

In the meantime, I gave all the assets to my children while I was alive

The answer is nothing. The government eats the loss.

by anon291

3/20/2026 at 11:37:13 AM

What loss? It was never the state's money to begin with.

by PowerElectronix

3/19/2026 at 9:39:59 PM

The government looks at your transactions as designed to produce that outcome and claws back the money from your children.

by HWR_14

3/19/2026 at 10:23:07 PM

Your heirs owe neither your debts nor your taxes

by anon291

3/20/2026 at 7:19:29 PM

Transactions designed to fraudulently hide assets can be reversed. Otherwise you could gift all your assets to your brother then declare bankruptcy.

by HWR_14

3/19/2026 at 6:11:43 PM

Because of cost basis step up at death, you can just defer forever.

by encoderer

3/19/2026 at 6:27:27 PM

The projector prices are a scam except for Christie and Barco

by brcmthrowaway

3/19/2026 at 7:35:17 PM

> For your leveraged investments, pay yourself in refinanced cash when your investments appreciate and/or credit rates drop.

In other words: Gamble that (1) your investments appreciate, or (2) that you will find credit rates drop when convenient.

In 1 word: Gamble.

So, either you are rich and have spare money to gamble, which sure, might be beneficial against taxes. But you could also gamble against any other sector (stocks, housing, startups...)

Or, if you are not rich, just put it in the 401k (or eq).

by yonixw

3/20/2026 at 11:04:54 AM

Along with already mentioned "Buy, Borrow, Die" strategy is the more widely practiced "Expense everything" strategy which often ends in tax disaster for the practitioner.

One of the early adopters was https://en.wikipedia.org/wiki/B._C._Forbes the founder of Forbes.

He expensed lavish Gatsby style parties and everything.

I remember reading a biography of his that one way in 1920s he accomplished was by having bought some big mostly useless plot of land and technically his lavish parties were sales presentations to sell this land. Occasionally some of his acquintances would actually buy a parcel of mostly useless land in middle of nowhere thus the business use was actually maintained. Again, highly unlikely to fly today with IRS and even then there were tax lawsuits.

The issue is that it is impossibly hard to pull off without going into tax fraud territory.

Another interesting case of "Expense everything" were ABBAs stage dresses and suits. They were purposely flashily impractical to avoid falling afoul of Swedish tax laws.

That said tax authorities in most countries do allow some leeway for the small fish. Basically pragmatic tax authorities give you certain limits for certain expenses that you can expense.

So in my European country you can expense a certain amount of gas, travel, clothing, eating out, etc as a self-employed. Yes you should have receipts, but if you stay within limits, it is up to you how honest you want to be about that "business" lunch.

I remember it being it common in US too, someone takes you to lunch and you are supposed to mention their business and talk a few minutes about their business, then in their eyes it was a business expense.

However, the moment you start going over these limits you will face increased scrutiny and you are in for a bad time for claiming as business expense lunch with your friends at Dorsia.

by sireat

3/19/2026 at 7:01:35 PM

It seems to me that I'm running into more people who just don't file their taxes. They wait for the IRS to send them a letter saying how much they owe, and they just pay that.

I can't figure out the thought process of someone who finds this sensible. Maybe there isn't one.

by SoftTalker

3/19/2026 at 7:06:04 PM

I’ve never heard of anyone doing this, but now I kind of wish everyone did. Maybe it would force the IRS to just give us a bill instead of having us try our best to calculate what we owe, submitting that, and then hoping that we don’t get an angry letter when the IRS calculates it themselves and their answer doesn’t jive with ours.

by jaxefayo

3/19/2026 at 7:39:36 PM

>an angry letter when the IRS

Do you have an example? I've seen dozens of IRS letters for dozens of different taxpayers and none of them had any "angry" language in them.

The myth that the IRS is trying to scare or traumatize you is just a dark pattern by certain 3rd party "tax resolution" services. The IRS is quite tolerant of the person who breaks the law by not filing and paying on time and provides many opportunities to come into compliance, starting with an automatic first-time abatement of the most common penalties.

https://www.irs.gov/individuals/understanding-your-irs-notic...

by PopAlongKid

3/19/2026 at 7:57:45 PM

I've had to deal with them multiple times.

They weren't angry with me. They were, however, obstinate. They disputed an education related credit. Each time I called them, they told me what documents they would need. I'd send it, and they'd continue the dispute. The cycle would repeat.

Here's what happened:

University sends me tax form. I file with my taxes.

"Just because they sent you the form doesn't mean you actually attended the school and paid your fees. Send us proof you paid them."

Sent proof of payments to the university.

"Just because you gave them money doesn't mean it was for tuition. For all we know they could be parking tickets. Send us the billing statement"

Called the university[1] to get a copy of the billing statement. Sent to the IRS to show the payments matched the tuition billed.

"Sorry, that's not enough. Send us a statement from the university with a line item showing the tuition was paid."

Sent it. They finally accepted it.

The university told me they'd never heard from any student that the IRS didn't simply accept the original tax form they send out.

[1] Keep in mind that this conversation happened 2-3 years after graduating.

by BeetleB

3/19/2026 at 7:52:06 PM

I file every year and I had one year where the IRS miscalculated my taxes twice on an older return. I got the first notice which was ok and they requested me to respond, which I did. The 2nd notice they recalculated what I owe and said I owed more than the original notice and said if I didn't pay in the next 1-2 months I owe tens of thousands of dollars plus interest. I ended up calling them and getting someone who needed help from someone else. She ended up laughing and hanging up the phone. I called again and got an old lady who immediately knew they made a mistake and I ended up with a $0 balance. If you get the right person, it is ok. I was kind of scared I would have to owe all this money I already paid and then some. It ended well but I lost sleep for days thinking about it.

by heyjon

3/19/2026 at 8:44:51 PM

The IRS has no idea of (for example) your primary residence or whether you’ve been attending a degree program.

It’s a lot like the old saw about Microsoft Excel: No one uses more than 20% of the features, but everyone uses a different 20%.

by twoodfin

3/19/2026 at 7:10:30 PM

I guess the accuracy of such solutions vary by jurisdiction; I just received my tax return for 2025 in Norway.

The sum owed I had calculated at the end of 2025 was less than 2% off from the sum our IRS equivalent came up with.

Their sum was the most favorable to me, though - they had adjusted a deduction I qualified for last year which I had missed.

This level of accuracy is down to our IRS knowing just about all there is to know about our income, assets, debts &c of course - oh, and on there being fewer loopholes in our tax code...

by lb1lf

3/19/2026 at 7:08:16 PM

That seems like a terrible idea. A good tax accountant will help you find ways to lower tax burden and save money. The IRS has no such incentive, and will probably just tax you at the standard rates for your gross income.

by celeritascelery

3/19/2026 at 7:07:58 PM

Well, frankly, that's exactly how it should work.

by something765478

3/19/2026 at 11:35:59 PM

I am a big proponent and teach my children pay as little taxes as you possibly can. Use all means available that are not fraud. So this article is a delight.

Our government in my generation failed me and my kids, they are busy in fighting wars, manufacturing crises abroad, and doing other nefarious things.

Question: can I use the means in this article to avoid my last year's tax? What asset categories are available to invest to defer my taxes, where can I learn more?

by robinsoncrusue

3/20/2026 at 2:20:17 AM

On the other hand, having "after tax" dollars that you can invest or spend freely is good too. Software engineers who defer capital gains too long may end up with concentrated appreciated assets. Diversifying results in a big tax bill. Nice problem to have, but still.

by skybrian

3/19/2026 at 6:42:25 PM

Is this advice from Wesley Snipes?

by davidfekke

3/19/2026 at 6:43:09 PM

Haha that made me laugh

by simonreiff

3/19/2026 at 8:00:44 PM

>Death is a popular escape from deferred taxes. When you die, your obligations to the government vanish. Your heirs inherit assets/property at market value. Their assets depreciate from new cost bases.

The article only addresses a subset of economic activity. The larger portion of the adult population are wage earners or retirees, not business owners. For them, large investments in Traditional IRAs or 401k plans are most definitely not able to escape upon death the income taxes that were deferred.

by PopAlongKid

3/20/2026 at 5:58:44 AM

I do taxes for a living.

This blogspam is advocating tax fraud.

Depreciation is permitted for business assets. In order to depreciate the lawnmower, you would need to claim it as a business expense. In order to claim a business expense, you also need to have some business income (net business losses are okay, but not having any income, or having only de minimis income, is a huge red flag). And importantly, you can't use the asset for personal use. Ever.

This type of tax fraud is the #1 cause of tax penalties. And because it's fraud, it also means the IRS has an unlimited time to audit and penalize you for it.

Rich people don't defer their U.S. taxes by buying depreciable property. They do so by buying investment property like stocks, and making charitable donations.

by gamblor956

3/20/2026 at 6:10:09 AM

It's half price to renounce citizen ship now, but that doesn't get you out of all of the obligations.

by triage8004

3/19/2026 at 5:56:45 PM

> Defer US taxes by reinvesting your taxable income into the economy as business expenses, depreciating assets, etc.

Be really careful when doing this. Make sure you have a great accountant - if you go more than a few years without turning a measurable profit, your risk of being audited apparently goes up. My accountant personally cautioned me about this since my business has been in an R&D phase for 5 years so we've been showing a small loss every year. The last thing you want is for the IRS to decide you've been cheating on your taxes.

by kg

3/19/2026 at 6:17:44 PM

This is true for most businesses (they will reclassify it as a "hobby" where expenses aren't deductible, though you can fight that in tax court or real court if you want to) - but for rental properties you can go for decades with no profits (because of depreciation).

by bombcar

3/19/2026 at 6:11:02 PM

Can you elaborate? As a business owner in the U.S. I can opt to reinvest all revenue back into the business, thus would show zero net profit but (presumably) increase my company’s value. (And remember there are other taxes and fees paid to various governments, not just tax on income/profit, so it’s not typically like nothing gets paid.)

by jt2190

3/19/2026 at 6:25:23 PM

You can't reclassify profit as reinvestment to show zero net profit. (If you could every business would have an internal hedge fund or private equity business and would show zero net profit).

by jeffreyrogers

3/19/2026 at 6:30:35 PM

>As a business owner in the U.S. I can opt to reinvest all revenue back into the business,

Not entirely, no. Any of those reinvestments that count as capital expenditures aren't immediately deductible, but only on a throttled schedule, which is why the concept of depreciation exists in tax law:

https://news.ycombinator.com/item?id=15061439

by SilasX

3/19/2026 at 6:37:01 PM

As a business owner, if you provide labor to the business, you have to pay yourself a salary.

by anon291

3/19/2026 at 6:47:06 PM

This is why many people make minimun wage - they get a salary but they use the business profits to live on. See your accountant for all the fine print before doing this.

by bluGill

3/19/2026 at 6:24:56 PM

The point is creating failed businesses is legal and tax deductible.

by xikrib

3/19/2026 at 6:38:35 PM

That's a great deal more complicated than our TFSA and RSP programmes, here in Canada.

by dleslie

3/19/2026 at 6:54:58 PM

RRSP first time home buyer credits can get a bit complicated though. Also, a fun fact - dual US-Canadian citizens can't (effectively) use TFSAs because the US considers appreciation in a TFSA to be taxable income.

by munk-a

3/19/2026 at 6:06:44 PM

If what was supposed to be your tax dollars is instead going towards giving more people work to do (and hence generate more taxes) the government will be happy.

by WarmWash

3/19/2026 at 7:33:11 PM

You can’t legally reclassify all your expenses as reinvestment. The IRS will determine what is actually an expenditure, and there are rules around it.

by fogzen

3/19/2026 at 7:02:10 PM

tax penalities are low interest loans, so you can invest the money and pay the IRS the penalties at the end of the year.

by tonymet

3/19/2026 at 8:43:46 PM

Not sure that I would classify 7% compounded daily as a low interest loan.

by hnburnsy

3/19/2026 at 7:04:43 PM

It is a good thing for life, money and health, to be clear how much is enough. In money frugality always wins. These billionaires they're very miserable. Their faces show stress, worry and animosity. People say money does bring happiness. It is BS. It holds true only if there is health.

by oxqbldpxo

3/19/2026 at 8:11:41 PM

We should force cost basis to rise some % every few years, in order make tax due on unrealized gains. How would that throw a wrench into these tax deferral schemes?

by deadbabe

3/19/2026 at 7:19:43 PM

Funny thing, states like CA, TX, TN going after folks who thought it good idea to register vehicles in MN and not pay their own local state sales taxes...

Please consult a real tax lawyer before even following such advice...

Why? They have skin in the game such losing their license if they do something wrong and illegal...

by fredgrott

3/19/2026 at 7:41:55 PM

The story I read recently involved Montana (MT), not Minnesota (MN).

by PopAlongKid

3/19/2026 at 7:00:47 PM

Or, just pay your taxes. We collectively benefit from them.

by buellerbueller

3/19/2026 at 7:07:01 PM

Is there really any correlation between tax revenue and spending at the federal level anymore? It seems the U.S. government is willing to spend at huge deficit levels. If everyone stopped paying federal taxes I suspect nothing would change.

by racingmars

3/19/2026 at 7:15:51 PM

What would change is the government would need to greatly increase their debt. In 2025 the government got about $5.23 trillion in tax revenue and spent about $7 trillion. So most of the government spending is financed by taxes. Remove that and the rate of debt quadruples (and by extension inflation).

by celeritascelery

3/19/2026 at 8:18:05 PM

When do we finally hit the cliff? Deficit has been going up for decades.

by asdff

3/19/2026 at 10:27:18 PM

> When do we finally hit the cliff?

When you can't pay the interest anymore?

by dataflow

3/19/2026 at 7:21:14 PM

Magical thinking! You may as well recommend the government prints more money and give it to everybody...

In FY2025, the U.S. federal deficit was $1.78 trillion, with total revenue at $5.23 trillion, so clearly it's a majority of revenue.

by marcandre

3/19/2026 at 7:29:29 PM

Up to now, I would have agreed with you. However, many residents of cities victimized by ICE see paying federal taxes as money that goes directly toward an enemy that is destroying their communities. I will happily pay my city and state taxes, but I no longer feel that my my federal tax dollars are helping much.

I live in Minneapolis, MN. The Federal government has cut public health grants, Medicaid, laid off a large portion of he Department of Health, cut Department of Human services, cut school funding, cut University of Minnesota funding, cut heating assistance, cut flood mitigation, cut USDA programs, and cut SNAP. This is just the things I can remember! Our city hosts Hennepin County Medical Center, which provides emergency care to the entire state, and it is risking closing due to federal cuts.

Minnesota has historically paid more in federal taxes than other states, and contributes more than it gets back. I think it's time for a change.

by pwenzel

3/19/2026 at 9:18:54 PM

>The Federal government has cut public health grants, Medicaid, laid off a large portion of he Department of Health, cut Department of Human services, cut school funding, cut University of Minnesota funding, cut heating assistance, cut flood mitigation, cut USDA programs, and cut SNAP.

Not paying taxes isn't going to re-fund these things. In fact, it will ensure they don't get funded.

There are always people who don't agree with a particular government's funding priorities; if we didn't pay when we don't agree, government would happen when we do support its priorities.

by buellerbueller

3/19/2026 at 10:39:43 PM

Paying federal taxes isn't going to re-fund those things. Executive Branch is now spending without Congressional approval.

Why pay taxation without getting representation?

by iAMkenough

3/19/2026 at 7:28:35 PM

We collectively benefit if you give me $1000 and I give you $1. That doesn't mean it's a good deal.

by charcircuit

3/19/2026 at 9:13:12 PM

Your example is zero sum; there is no collective benefit. Investment in roads enable commerce. Investments in education enable future technology.

by buellerbueller

3/20/2026 at 3:04:38 PM

And does our government do that? It seems we have one party that wants to pay for theatrical law enforcement and another party that wants to pay for performative DEI nonsense

by anon291

3/20/2026 at 12:31:53 AM

What if you were keeping the $1000 in a bank account and I will invest $900 into a scholarship to pay for someone's education. You can invest $0.90 into roads. Now the example has a collective benefit for both of us.

by charcircuit

3/20/2026 at 1:31:25 PM

You keep making these silly examples that are not how taxes work. Try again with everyone investing $0.90 into roads, and everyone investing $900 into education.

by buellerbueller

3/20/2026 at 12:56:53 AM

[dead]

by crowthevegan44

3/19/2026 at 9:14:16 PM

[dead]

by melissarick10

3/20/2026 at 1:05:45 AM

[dead]

by nsollazzo53

3/19/2026 at 8:05:00 PM

[dead]

by farceSpherule

3/19/2026 at 6:43:07 PM

super cool

by uoflcards22

3/19/2026 at 6:10:43 PM

This feels like a great way to get audited by the IRS. It does not feel like sound advice.

by josefritzishere

3/19/2026 at 6:39:47 PM

So the advice here is (from my understanding, not a tax lawyer) sound, but it is "unsound-adjacent" -- so a lot of people will start from this basic understanding and then go off into crazytown.

So like influencers get to hear other influencers explaining this "you can reinvest your profits and then you won't have profits" type of advice... but then they will put it right next to unsound advice about "by the way, a great way is to invest in a "business" trip to Greece to sail the Mediterranean, it is "team-building" between you and your spouse and kids who are all employees of your little influencer company, oh by the way you should buy fancy watches so that you can show them off in your videos, and get a very expensive hairstylist to do your hair -- as long as you make a video about it!"

And it's like, no, the tax courts actually have procedures they follow to determine if those things are personal expenses or business expenses and 90% of the advice that you hear here are some form of tax fraud.

But from the point of view of a company, as the tax year comes to an end you hopefully have extra money left in the bank, now you can either use it to buy things that the company needs and thus grow the company, or you can hold onto it where if you're a C-corp the government will take 21% of the year-on-year delta, or you can pay it back to the shareholders as a dividend and they pay 15% capital gains tax on it. (And of course you don't have to dump the whole account into just one bucket, you can choose how much goes into each of the three.) And when it gives the advice "pssst, you should probably reinvest most of it," that's a standard practice explicitly sanctioned by the government.

by crdrost

3/19/2026 at 6:27:10 PM

I don't know if you're right or wrong, but it is an incredibly common tactic and done all the time by many businesses and people. There are of course ways to do this that are less noticeable by the IRS (as acknowledged in the article) and it doesn't seem like they have the capacity to investigate and audit the vast amount of this practice. My understanding is they are typically focused on fraud and/or folks simply not filing.

by elliotec

3/19/2026 at 6:48:22 PM

All of these techniques are entirely routine for the average company with even a semi decent accountant, and only marginally increase the chance of an audit.

You do have to be sure you follow the rules and avoid various gotchas that other people in this section have pointed out, but otherwise it is entirely legal and routine.

by compiler-guy

3/19/2026 at 8:49:26 PM

No kidding. It's pretty normal for a high-growth company to not turn a profit for years because they keep on taking on expenses to try to grow quickly, and this is explicitly allowed now for R&D.

Actively involved owners live off of a salary paid by the company.

by trollbridge

3/19/2026 at 6:27:04 PM

I'm getting very strong sarcastic vibes from the article.

by dgb23

3/19/2026 at 6:56:53 PM

Nah, the maximally sarcastic advice for tax avoidance is "become president" then you can just refuse to prosecute yourself for tax evasion and sue yourself for a ridiculous sum of money when someone leaks your tax avoidance.

by munk-a

3/19/2026 at 7:02:16 PM

How to Not Pay Any Taxes: don’t be American.

Living tax free is easy enough for everyone except Americans.

by 3rodents

3/19/2026 at 7:08:54 PM

Where are you living that you don't have to pay taxes?

by unclad5968

3/19/2026 at 7:11:57 PM

That’s the trick. Don’t live anywhere. Every other country taxes based on residency rather than citizenship. If you’re not a U.S. citizen you can just wander around the world living tax free regardless of your income. Don’t stay anywhere long enough to become a tax resident.

by 3rodents

3/19/2026 at 7:40:20 PM

Sorry but that's been a meme and a house of cards since the Common Reporting Standard.

The fact is that the country whereever you carry any legal activity will require you to prove you're taxed elsewhere not to tax you in place.

To carry out economic activity you'll need a presence, if it's a company it's corporate tax, if you're freelance you'll need a registered address.

Most banks will freeze you without a TIN and and address.

Plus the whole can of worms of the centre of vital interests or source-based taxation systems.

In the moment you input an address in the financial system, the tax administration will know, and they will knock your door for any significant income, plus arrears, pulling one of the cards from your house, and it's not going to be pretty.

by fer

3/19/2026 at 7:47:07 PM

You are categorically incorrect.

Picking a random country: Italy. Please explain under what legislation or mechanism an Italian citizen who spends 3 months in Japan, 3 months in South Korea, 3 months in the U.S., 3 months in Norway and then repeats the loop for the rest of their life would owe any taxes to any tax authority?

Almost every country except the United States only taxes their residents, not citizens. Almost every country follows the typical 180 day rule for tax residency.

by 3rodents

3/19/2026 at 8:13:35 PM

Funny pick, because Italy is very strict on this. To stop being considered a tax resident in Italy you need to deregister from your municipality and register in the AIRE (Anagrafe degli Italiani Residenti all'Estero). But for the AIRE to accept your application on the Italian consulate in any of those countries you need to provide proof of permanent residence (address, work contract, company ownership, etc). If you don't do that, you're still considered resident of Italy for tax purposes, if you do it, congrats you're tax resident elsewhere. Registering in the AIRE is mandatory if you move, btw.

If you add the legislative decree 209/2023 article 1 that modifies the tax code and sets the basis for the centre of vital interests, it complicates things even further for the "permanent traveler" for simply having a family or ever having been long term resident in a country.

by fer

3/19/2026 at 8:48:52 PM

Let's pretend my random country generator didn't pick the worst possible example. I should have chosen a country I am familiar with. Let's take Germany. A German tax resident can de-register at any time, so long as they are leaving the country, without first establishing tax residency elsewhere.

by 3rodents

3/19/2026 at 9:36:49 PM

In Germany, unregistering doesn't require registration elsewhere, but it doesn't mean you stop being tax resident.

If you regularly return to Germany and generally to the same place there (i.e. family, friends), and you're not tax resident elsewhere, the tax administration will consider it your habitual abode. And, you guessed it, under the German Fiscal Code (Abgabenordnung), you are a tax resident if you have a domicile or habitual abode in Germany.

Plus, under Extended Limited Tax Liability (Erweiterte beschränkte Steuerpflicht), any significant economic presence in Germany (assets, German clients, participation in a company, bank accounts) will pull you into the tax jurisdiciton for 10 years, not only as permanent traveler but also if you move to a low-tax country.

So while different, it's similarly difficult. It's technically possible but you have to leave Germany and basically cut all ties, difficult if you're German.

If you're not German, you can completely escape the claws of the German fisc with relative ease. But if you're say Spanish, Hacienda will consider you tax resident in Spain even if you never ever lived in Spain (i.e. born abroad). There's all sort of sticky tax rules in numerous countries: you're tax resident until you prove you're tax resident elsewhere, the aforementioned nationality fallback, essential ties rules, the "domicile" concept (i.e. where you intend to live until you die).

Plus, and I reiterate, the difficulty in obtaining a simple bank account without a TIN and proof of address in most countries.

I'm sure there are corner cases with exotic nationalities and carefully selected tax jurisdictions with lax "tax residency" tests to rotate along, and numerous nomads fly under the radar for various reasons (illegally of course), but I assure you it's way more complicated than "lol just don't be American/Eritrean and travel all the time", plus tax laws constantly change, and not to leave you more loopholes.

by fer

3/19/2026 at 10:45:19 PM

> Plus, under Extended Limited Tax Liability [...] bank accounts [...] Plus, and I reiterate, the difficulty in obtaining a simple bank account without a TIN and proof of address in most countries.

You're doing what so many people who make this argument do. You're taking an extreme example that laws have been crafted to tackle and using it to represent the norm. A normal German citizen with a normal amount of money leaving Germany to become a nomad and travel the world, never establishing tax residency in any other country, will not need to open a bank account anywhere else, nor will they be subject to Extended Limited Tax Liability which is designed to capture tax from people who try to terminate their tax residency before realizing substantial gains on local assets. Completely irrelevant to almost every person on earth.

My original assertion is that unless you are American (or, apparently, Italian) the normal person can up sticks one day and wander the world, and so long as they never establish tax residency anywhere, they will be living an entirely legal tax free[1] life. Of course doing so requires giving up the things humans need, like stability, so it is a terrible life for most, but the point is, it is legal and easy.

> [...] and numerous nomads fly under the radar for various reasons (illegally of course), but I assure you it's way more complicated than "lol just don't be American/Eritrean and travel all the time"

"illegally of course" again, false. There is no universal tax law that we are all subject to. The Common Reporting Standard is intended to combat tax evasion. A person who does not have tax residency is not engaging in tax evasion, they are just a person without tax residency.

Rather than speak in theory and hypotheticals, can you point to any real world examples of someone being charged / tried / accused of tax evasion because they didn't have tax residency?

> plus tax laws constantly change, and not to leave you more loopholes.

Why are you framing it as a loophole? Not having tax residency isn't a loophole, just as not having a car isn't a loophole for a drivers license.

Despite my argument, I am pro taxation. Taxation is needed to support society. We pay taxes to contribute to the society we are a part of. Taxation isn't punitive. But if someone opts out of being a part of a society, if they choose to wander the world, without the benefits of having a home and community, why would they be expected to pay taxes? And to who? Tax residency is a good system, a fair system.

[1] tax free is a bad term anyway because tourists pay consumption taxes but we're talking about income taxes

by 3rodents

3/20/2026 at 5:00:50 PM

> A normal German citizen with a normal amount of money leaving Germany to become a nomad and travel the world, never establishing tax residency in any other country, will not need to open a bank account anywhere else

That will make you tax resident in Germany as all of your financial interests are in Germany. It's not an extreme example at all, it's the basic case to catch.

>My original assertion is that unless you are American (or, apparently, Italian) the normal person can up sticks one day and wander the world, and so long as they never establish tax residency anywhere,

Or Spanish. Or Belgian. Or French. Or Germany. Or basically any OECD country, and most non-OECD ones.

>they will be living an entirely legal tax free[1] life.

Legal as long as they don't generate any income, and even then, wealth taxes could kick in.

>Of course doing so requires giving up the things humans need, like stability, so it is a terrible life for most, but the point is, it is legal and easy.

It's really not easy at all to do legally, but at least we agree it's difficult to do emotionally.

>"illegally of course" again, false. There is no universal tax law that we are all subject to.

That's the fun part: virtually all OECD tax laws are universal.

>The Common Reporting Standard is intended to combat tax evasion. A person who does not have tax residency is not engaging in tax evasion, they are just a person without tax residency.

That's sovereign citizen tier of delusional. Plus I proved again and again that tax residence isn't bound to only where you are/live, at all, for over a decade, for any developed country and most developing ones.

>Rather than speak in theory and hypotheticals, can you point to any real world examples of someone being charged / tried / accused of tax evasion because they didn't have tax residency?

https://www.bbc.co.uk/news/entertainment-arts-67472496

She played the "I didn't stay anywhere for too long lol" card because she was touring most of the time, and she was slammed by the Spanish fisc on the basis of her centre of vital interests.

Literally most rock/pop stars would be living tax free if what you said was true, unfortunately for them it's not the case.

You won't find many high profile cases because the people who make money use expensive tax advisors who tell them not to do what you suggest, but since you're familiar with Germany, here's another: https://www.theguardian.com/world/2002/oct/25/germany.tennis

> Why are you framing it as a loophole? Not having tax residency isn't a loophole, just as not having a car isn't a loophole for a drivers license.

Not having a tax residency prevents you from legally doing business pretty much anywhere where it's worth doing business. I have to ask for a work visa in some countries I visit because of work even if there's a tourist visa-free regime for me, I literally am not allowed to do any work there. Would they notice? Probably not. But what happens if they do? That I and most importantly my company are in deep shit.

by fer

3/19/2026 at 7:07:25 PM

> If you aren't actually reinvesting capital, pay your damn taxes. Don't be an asshole.

Why? So my government has more missiles to blow up children? No thanks.

by codemog

3/19/2026 at 7:33:30 PM

There are more productive ways to vote with your money than tax evasion.

You can make tax-exempt donations, or start your own non-profit organization.

Some people hoard money without building businesses, without participating in government, without contributing to welfare. People who take more than they give are assholes.

by surprisetalk

3/20/2026 at 4:46:33 PM

> People who take more than they give are assholes.

100%. I hate welfare leeches too

by SubmarineClub

3/19/2026 at 7:34:02 PM

You're conflating "taxes" with federal taxes.

In my state (NY), I pay income tax to the feds and NY state. I pay property tax to my county and town. This pays for things like roads, cleanup and maintenance, the school district, the library, the parks and sports recreations. The community trails and wildlife preserves.

by petcat

3/19/2026 at 7:17:07 PM

Most tax money goes to social programs. Especially at the state and local level.

by tootie

3/19/2026 at 8:18:43 PM

The federal government can basically print money. The only reason they "need" your tax money is to limit inflation.

by usefulcat

3/19/2026 at 8:48:05 PM

You’re not wrong, unchecked inflation is bad for most people though. Stable currency is pretty important for trade and economic stability. Unless you prefer heating your home by burning stacks of cash

by mcmcmc

3/20/2026 at 2:52:58 PM

Oh, I agree. I never said unchecked inflation was at all desirable or even ok.

My point was that local and state governments do need your tax dollars, in the sense that that is literally their income. But for the federal government it's different. If federal tax revenue declines, they can just sell more treasury notes and continue to spend as much as before. In that sense, federal tax revenue has no direct effect on federal spending.

by usefulcat

3/19/2026 at 7:21:27 PM

You know that’s not the entire budget right? You’re being an asshole by denying funding for disaster relief, schools, healthcare, roads, scientific research, all the public goods and services that don’t work on a profit driven model, but you still get a direct benefit from.

If you want to play concerned citizen get out and protest, vote with your dollars by not throwing them at big tech companies who kowtow to politicians and fund their campaigns. But if you think you’re sending kind of message by withholding your taxes, it’s really just that you’re a selfish asshole.

by mcmcmc

3/19/2026 at 7:35:16 PM

> vote with your dollars by not throwing them at big tech companies

Abstaining is not voting. If you want to vote with your dollar, spend it actively undermining big tech companies. Get out there and blind some cameras or something.

by __MatrixMan__

3/19/2026 at 8:44:31 PM

> Abstaining is not voting.

Fair if you’re already not giving them money. But if you manage a sizable chunk of cloud spend at AWS, GCP, Azure etc, you can send a meaningful signal by taking away that revenue and shifting it to a company that’s not aiming for neo-feudalism.

by mcmcmc