Reclassifying salary as capital gains 

Common in private equity and hedge funds 

It’s similar to carried interest 

Capital Gains Tax is capped at 20 percent today 

Bell_curve

Interesting. I don't think I had heard of that before.

Undisciplined

The keyword is deferral 

Capital gains tax kicks in if you hold an asset for at least one year plus one day or 12 months plus 1 day 

Otherwise it’s taxed as ordinary income. 

Shohei Ohtani is deferring 680 million for at least 10 years lol 


but I've read that the 90% marginal tax rate was largely a fiction

A very big thing in 50s / 60s was "deferred compensation agreements". Basically reclassified salary into capital gains. Typically they would pay you a year later....so a small portion of your 1951 was paid to you then, then the bulk paid to you 12 months later...

charts_and_numbers

History of Federal Tax Rates

davidw

> but I've read that the 90% marginal tax rate was largely a fiction

A very big thing in 50s / 60s was "deferred compensation agreements". Basically reclassified salary into capital gains. Typically they would pay you a year later....so a small portion of your 1951 was paid to you then, then the bulk paid to you 12 months later...

