JohnC Posted November 26, 2012 Share Posted November 26, 2012 I think the most convincing interpretation is the simplest one: that Wilson sees his ownership as keeping him alive, and that if sold them he'd die shortly thereafter. The Bills give him a reason to get up in the morning. Without them, he doesn't have one. I heard him state what you posted. When asked why at his age he still owns the team he said it is what gets him up and going in the morning. He also pointed out that he likes being an owner and having a say in the operation. Ralph is not going to share ownership, no matter how small, with anyone else. That's not how he operates. The profits are all his and there is no one to challenge how he handles the operation. My view is that he is going to auction the team to the highest bidder. There is a good reason why he refused to commit to an extended lease in the renovation negotiation. If he committed to keeping the franchise in the region for an extended period of time it would encumber his golden goose asset and make it less appealing to some bidders. In addition, if anyone expects this 94 yr old owner to contribute $$$$ for a renovation project is deluding himself/herself. He has never done so before and for sure he is not going to do so at this very late stage of his existence. The approach that meets his needs is a year to year lease until the finish line is met. Link to comment Share on other sites More sharing options...
Haven Moses Posted November 26, 2012 Share Posted November 26, 2012 In the past, Ralph has not hesitated firing coaches midseason. Not to sound morbid, but I think Ralph is alive, but not necessarily lucid. Link to comment Share on other sites More sharing options...
BringBackFergy Posted November 26, 2012 Author Share Posted November 26, 2012 If he sold now and paid capital gains tax and was left with say $500M as an example, wouldn't his estate then have to pay estate taxes on that once he died? Wouldn't this be actually worse - as he would get taxed twice? In the second to last paragraph of the original post I compared a bare bones estimate of what the tax liability would be if he sold, paid capital gains and then his estate pays estate tax vs. paying estate tax directly without selling. It is a difference of about $100 million. I guess the question posed is, if he decides to keep the team in his estate, the estate takes the stepped up basis but the team (as an asset) is still part of his taxable estate. With tax increases looming (and the estate tax in particular) his decision to keep the team in his estate (to avoid being taxed twice) could conceivably backfire if the estate tax increase (percentage tax) is significant (i.e. an increase in the estate tax might overtake the other scenario where he sells and pays cap gains tax and has cash in his estate. Link to comment Share on other sites More sharing options...
bbb Posted November 26, 2012 Share Posted November 26, 2012 In the second to last paragraph of the original post I compared a bare bones estimate of what the tax liability would be if he sold, paid capital gains and then his estate pays estate tax vs. paying estate tax directly without selling. It is a difference of about $100 million. I guess the question posed is, if he decides to keep the team in his estate, the estate takes the stepped up basis but the team (as an asset) is still part of his taxable estate. With tax increases looming (and the estate tax in particular) his decision to keep the team in his estate (to avoid being taxed twice) could conceivably backfire if the estate tax increase (percentage tax) is significant (i.e. an increase in the estate tax might overtake the other scenario where he sells and pays cap gains tax and has cash in his estate. Got it - thanks for clarifying. Link to comment Share on other sites More sharing options...
BringBackFergy Posted November 26, 2012 Author Share Posted November 26, 2012 BBF, I won't burden this thread with the details by repeating them all here, but since we seem to share an interest in trying to figure out how a businessman like Ralph would arrange his NFL affairs, you might want to check out reply #s 183 and 186 in this thread: http://forums.twobil...y/page__st__180 In particular, note the links to articles about how NFL owners in Baltimore and Miami transferred partial ownership in their franchises in conjunction with an option to buy the rest in the future. It seems possible to me that Ralph could avoid the requirement to seek current NFL approval of an ownership transfer by granting an investor (whether from Toronto or elsewhere) a right of first refusal. Some people here think that wouldn't work because the NFL might not approve the eventual sale to such an investor after Ralph passed. But it's no different than buying a house contingent upon it passing a future inspection. In both cases, you can structure the deal so that the potential buyer doesn't lose any money (if the house doesn't pass a future inspection or if the NFL doesn't approve the buyer in the future after Ralph passes). Just my 2 rupees. I agree with both of those posts. The only consideration paid in an Option or Right of First Refusal is an opportunity to buy in the future if certain events occur or a deadline is met. There is no transfer of ownership requiring approval. Got it - thanks for clarifying. I'm no expert on taxable estates of this size...like I said, I'm a solo practice attorney and handle estates but nothing of this size and complexity...but I'm willing to learn if there is a member out there who deals with multi-million dollar estates in their practice. Link to comment Share on other sites More sharing options...
plenzmd1 Posted November 26, 2012 Share Posted November 26, 2012 I ...but I'm willing to learn if there is a member out there who deals with multi-million dollar estates in their practice. Let me ask the guy who is handling our estate... oh you said multi millions, not hundreds..I am out then Link to comment Share on other sites More sharing options...
BringBackFergy Posted November 26, 2012 Author Share Posted November 26, 2012 Let me ask the guy who is handling our estate... oh you said multi millions, not hundreds..I am out then LOL....Would be nice to have Ralph's problem wouldn't it??? Link to comment Share on other sites More sharing options...
ICanSleepWhenI'mDead Posted November 26, 2012 Share Posted November 26, 2012 (edited) . . .I guess the question posed is, if he decides to keep the team in his estate, the estate takes the stepped up basis but the team (as an asset) is still part of his taxable estate. With tax increases looming (and the estate tax in particular) his decision to keep the team in his estate (to avoid being taxed twice) could conceivably backfire if the estate tax increase (percentage tax) is significant (i.e. an increase in the estate tax might overtake the other scenario where he sells and pays cap gains tax and has cash in his estate. BBF, Isn't the same amount of federal estate tax due if Ralph's estate includes (1) a debt-free NFL team valued at $800 million, or (2) $800 million of cash? And isn't that true at either 2012 estate tax rates or presumably higher 2013 estate tax rates? If the answer to both questions is yes, I don't see how Ralph comes out ahead financially by selling the team in 2012 rather than 2013. Look at it this way. If Ralph passes in 2012, the government will let his estate keep say about 65% of whatever his net worth was on the day in 2012 that he died. Let's say that net worth is "X." You are reasonably suggesting that if Ralph passes in 2013, and estate tax rates have gone up by then, the government will let his estate keep less than 65% of X. Let's assume the coming increase in estate tax rates is huge, and the gov't only lets Ralph's estate keep 20% of X if he dies in 2013 or later. How does Ralph ever come out ahead by selling the team before he dies? In my example, if Ralph keeps the team and dies in 2013, his estate keeps 20% of X. OTOH, if Ralph sells the team in either 2012 or 2013 before he dies, his net worth at date of death will be less than X, because the sale triggered a capital gains tax (at whatever rate), that Ralph would not have been required to pay if he kept the team till he died. So if estate tax rates go up, Ralph keeps 20% of X if he keeps the team, but only 20% of [less than X] if he sells before he dies. Am I missing something? Edited November 26, 2012 by ICanSleepWhenI'mDead Link to comment Share on other sites More sharing options...
BringBackFergy Posted November 26, 2012 Author Share Posted November 26, 2012 BBF, Isn't the same amount of federal estate tax due if Ralph's estate includes (1) a debt-free NFL team valued at $800 million, or (2) $800 million of cash? And isn't that true at either 2012 estate tax rates or presumably higher 2013 estate tax rates? If the answer to both questions is yes, I don't see how Ralph comes out ahead financially by selling the team in 2012 rather than 2013. Look at it this way. If Ralph passes in 2012, the government will let his estate keep say about 65% of whatever his net worth was on the day in 2012 that he died. Let's say that net worth is "X." You are reasonably suggesting that if Ralph passes in 2013, and estate tax rates have gone up by then, the government will let his estate keep less than 65% of X. Let's assume the coming increase in estate tax rates is huge, and the gov't only lets Ralph's estate keep 20% of X if he dies in 2013 or later. How does Ralph ever come out ahead by selling the team before he dies? In my example, if Ralph keeps the team and dies in 2013, his estate keeps 20% of X. OTOH, if Ralph sells the team in either 2012 or 2013 before he dies, his net worth at date of death will be less than X, because the sale triggered a capital gains tax (at whatever rate), that Ralph would not have been required to pay if he kept the team till he died. So if estate tax rates go up, Ralph keeps 20% of X if keeps the team, but only 20% of [less than X] if he sells before he dies. Am I missing something? I see your point. If he sells now and puts cash into his account and sits on it, he will not only pay 15% on long term capital gains, but have the net sale proceeds as part of his estate that will be taxed at 50% or more if the estate tax rate increases. I made an assumption that Ralph would presumably put a chunk of money into his "Ralph C Wilson Foundation" and avoid estate taxes on a large part of it...on the other hand, he could direct that a gift be made to the Foundation in his estate plan as well. The only difference being that if he sells now and takes a minor 15% hit on Capital gains, he could put a large part into the Foundation leaving less subject to an increased estate tax (your example 80%). If he holds the team and it is an estate asset, I am unsure if the estate tax applies to the net cash left over after gift to the foundation or before the gift to the foundation. With tax laws changing in the next few years...I guess I thought it would make sense to stick with what we know (the law of 2012). So basically, he's not gonna avoid the "tax man" either way, and selling now doesn't put him in a better spot....unless he sells, takes the hit on Capital Gains at 15% and spends the rest like a drunken sailor (no offense to our armed service members). Link to comment Share on other sites More sharing options...
ICanSleepWhenI'mDead Posted November 26, 2012 Share Posted November 26, 2012 Isn't there a limit on how much a person can give away each year for the purpose of getting money out of their estate to avoid future estate taxes? For an estate of over $800 million, can you really avoid anything but a small percentage of the future estate tax by gifting? This article is almost 2 years old, but it talks about a $10 million lifetime gift tax exemption, and an entirely separate $13,000/year limit on gifts to any one individual that don't count against the $10 million lifetime limit. http://www.nytimes.com/2011/02/13/business/yourtaxes/13estate.html I haven't looked for any recent changes not described in the article, but it seems like gifting strategy is not likely to be a big factor in Ralph's decision about whether to sell the team before he dies. Link to comment Share on other sites More sharing options...
BringBackFergy Posted November 26, 2012 Author Share Posted November 26, 2012 Isn't there a limit on how much a person can give away each year for the purpose of getting money out of their estate to avoid future estate taxes? For an estate of over $800 million, can you really avoid anything but a small percentage of the future estate tax by gifting? This article is almost 2 years old, but it talks about a $10 million lifetime gift tax exemption, and an entirely separate $13,000/year limit on gifts to any one individual that don't count against the $10 million lifetime limit. http://www.nytimes.c...s/13estate.html I haven't looked for any recent changes not described in the article, but it seems like gifting strategy is not likely to be a big factor in Ralph's decision about whether to sell the team before he dies. The 13k/year still applies and if you give anything over that, you have to file a gift tax return which then compiles all the gifts you made and subtracts it from your "lifetime gift tax exemption". I think it used to be 10 mill and that may have been the same year when Steinbrenner died (the estate tax was 0 that year)...the year after, it phased back to 2006 levels I believe and has been kicking around the $5 million level I believe. The Obama administration is targeting high income and estates for tax revenue (not saying that in the pejorative so don't attack me as being political...it's the truth). But I believe charitable giving (as opposed to giving $5 million to your son to buy a new house) is different and does not count against your lifetime exemption. If those limits are decreased in the next few years, charitable estate tax deductions might not be as attractive as they are now (including gifts to foundations during your life). It's so damn complex and is such a huuuge field. I admire any accountant or attorney who knows his/her way around the maze of high end estate planning. Link to comment Share on other sites More sharing options...
ICanSleepWhenI'mDead Posted November 26, 2012 Share Posted November 26, 2012 But I believe charitable giving (as opposed to giving $5 million to your son to buy a new house) is different and does not count against your lifetime exemption. I have never heard that, but I didn't stay at a Holiday Inn Express last night so I may only know enough to be dangerous on this topic - - I tend to agree that it can get complex pretty quickly. Anybody have a link to answer the question about whether charitable giving to a foundation (or non-profit organization?) gets different treatment for gift/estate tax purposes than a gift to your own child? Link to comment Share on other sites More sharing options...
Mr. WEO Posted November 26, 2012 Share Posted November 26, 2012 BBF, I won't burden this thread with the details by repeating them all here, but since we seem to share an interest in trying to figure out how a businessman like Ralph would arrange his NFL affairs, you might want to check out reply #s 183 and 186 in this thread: http://forums.twobil...y/page__st__180 In particular, note the links to articles about how NFL owners in Baltimore and Miami transferred partial ownership in their franchises in conjunction with an option to buy the rest in the future. It seems possible to me that Ralph could avoid the requirement to seek current NFL approval of an ownership transfer by granting an investor (whether from Toronto or elsewhere) a right of first refusal. Some people here think that wouldn't work because the NFL might not approve the eventual sale to such an investor after Ralph passed. But it's no different than buying a house contingent upon it passing a future inspection. In both cases, you can structure the deal so that the potential buyer doesn't lose any money (if the house doesn't pass a future inspection or if the NFL doesn't approve the buyer in the future after Ralph passes). Just my 2 rupees. Well, like a house, no money would change hands until after all contingencies have been lifted. Therefore Ralph can not have sold any part of the team yet. Link to comment Share on other sites More sharing options...
JPS Posted November 26, 2012 Share Posted November 26, 2012 Why would he sell now when there's at least a possibility of a major tax code re-write? The Estate Tax is not going to get worse. RC's big tax hit is going to be an Estate Tax, not Capital Gains. Maybe he thinks he'll save his progeny ALL of the Estate Tax if he just holds on long enough for the new tax code. Then again, if he sells now, then he has $600 mil more in the bank. Aw hell I dunno. If I had any idea how to manipulate the tax code, I wouldn't be on this board. Link to comment Share on other sites More sharing options...
Ed_Formerly_of_Roch Posted November 27, 2012 Share Posted November 27, 2012 And you know this how?? Did RW personally tell you? And even if he did what he publicly states vs what he really thinks, are likely two different things. Any team and any coach in any sport will never publicly state anything negative unless they are going to make a change now. 20 or 30 years ago was common practice to change coaches mid season, that's gone away, so likely CG will be here till seasons end. Will RW fire him then, I'd say there's a good chance it will happen, but whether RW plans to or not, at this point, we have no clue. I do think RW still talks with CG, RB, and Nix regularly, however I don't think he has the energy to put into the team what he once did. He does appear to be slowing down considerably. That's the sad part...Ralph is buying what Chan is selling. Aren't there laws against taking advantage of the elderly with telemarketing scams. Link to comment Share on other sites More sharing options...
rick in hartford Posted November 27, 2012 Share Posted November 27, 2012 ...this is very complex stuff, lets make an appointment and in the mean time I'll send out our engagement letter, you sign and return with a $15k retainer. Can't wait to meet you! Link to comment Share on other sites More sharing options...
BringBackFergy Posted November 27, 2012 Author Share Posted November 27, 2012 ...this is very complex stuff, lets make an appointment and in the mean time I'll send out our engagement letter, you sign and return with a $15k retainer. Can't wait to meet you! I'll pay you in Bills' preseason tix if that's alright?? Link to comment Share on other sites More sharing options...
birdog1960 Posted November 27, 2012 Share Posted November 27, 2012 ...this is very complex stuff, lets make an appointment and in the mean time I'll send out our engagement letter, you sign and return with a $15k retainer. Can't wait to meet you! and that's the sad part. probably more appropriate for ppp but it needn't be this complicated. but even if it were simple, wilson's actions would not primarily or even secondarily be motivated by loyal, long suffering fans interests. Link to comment Share on other sites More sharing options...
BringBackFergy Posted November 27, 2012 Author Share Posted November 27, 2012 Why would he sell now when there's at least a possibility of a major tax code re-write? The Estate Tax is not going to get worse. RC's big tax hit is going to be an Estate Tax, not Capital Gains. Maybe he thinks he'll save his progeny ALL of the Estate Tax if he just holds on long enough for the new tax code. Then again, if he sells now, then he has $600 mil more in the bank. Aw hell I dunno. If I had any idea how to manipulate the tax code, I wouldn't be on this board. Don't bank on that. Wealth transfer from generation to generation is one of the major targets of the current government/Treasury. Link to comment Share on other sites More sharing options...
dave mcbride Posted November 27, 2012 Share Posted November 27, 2012 You guys are crazy. For good or ill, I'm pretty certain that Wilson's sources of meaning in life are his wife/family and the Bills, and not necessarily in that order. Whether he's taxed at a high or low rate after he's dead is probably meaningless to him given that whoever ends uo with it is going to be rich beyond belief even if they suffer very high taxes. He's not selling while he's alive. Link to comment Share on other sites More sharing options...
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