Why Apple investors are running from the U.S. tax man

“There are many who wish to proclaim that tech giant Apple has suddenly lost its ability to innovate,” Richard Saintvilus writes for Forbes. “Really?”

“Well, take it from this investors, I can most certainly tell you that is not the case,” Saintvilus writes. “Instead, the reason for the recent selloff has had less to do with Apple and everything to do with taxes, or more specifically, the fiscal cliff. More to the point, investors want to be a few steps ahead of the tax man, as opposed to the recent cries of manipulation or any other theory.”

“Everyone is looking for any exploitable route in order to preserve more of their capital. It seems like a good idea. But is it?” Saintvilus writes. “In theory, yes. But I just don’t see how this benefits companies or investors in the long run. Why would anyone want to divest themselves from a winner like Apple merely for taxes purposes? On the other hand it’s hard to blame investors for doing so. As I’ve said recently, this is a mess that our government has created by making something more expensive, in this case cash.”

Saintvilus writes, “[AAPL] investors have gotten better at running from higher tax payments. Hopefully, for their sake, they are not also running away from long term profits.”

Read more in the full article here.

Related article:
Analyst: Apple’s stock price reflects ‘fantastically pessimistic assumptions’ – December 8, 2012

29 Comments

  1. Running away from tax is understandable . But , you sure you can buy back AAPL at good price ? U may have saved your tax , but you earns less than you stay as Apple soars to 800 on jan and u miss it .

  2. I sold shares for taxes last month. Why not? I figured it saved me several thousand dollars in capital gains taxes and after 30 days (which will still be in December), I will buy again and avoid the “wash sale” rules. And, it appears it will be cheaper again. Win-win.

    1. But for those U.S. taxpayers who want to take a long-term capital gain instead of a loss, and thereby get the 15% rate, the wash sales rules don’t apply. It’s possible to buy back immediately.

    2. I don’t think gains are covered by a “wash sale”, only losses. Losses are covered by a “wash sale” because the IRS doesn’t want you to take a deduction. However the IRS is more than delighted to collect tax on a gain. Check with your tax advisor. You might be able to buy AAPL anytime after you sold it at a gain.

      From Wikipedia (notice the words “at a loss” on the 2nd line):
      “A wash sale (not to be confused with a wash trade) is a sale of a security (stock, bonds, options) at a loss and repurchasing the same or substantially identical stock shortly before or after. The idea is to make an unrealised loss claimable as a tax deduction, by offsetting against other capital gains in the current or future tax years. The security is repurchased in the hope that it will recover its previous value.”

    3. Wash sale rules don’t apply to gains, only losses. On a gain sale, you can buy it back the same or next day, if you want. MF cut off was Oct 31. I believe it is something more sinister. not sure if it is FUD, hedges or algo trading. I’ve stayed long much to my dismay. not sure how much more pain I can endure
      .

  3. But why was only Apple affected by these tax problems? There were certainly other stocks that were close in gains to Apple and I didn’t see them dropping all to hell. Both Google and Apple had some fairly decent gains and almost nobody sold them off. My BS detector is going off again. Of course, it might just be short-circuited from going off so much lately.

    1. Explanation….In 2008 when Google reached 700, apple reached high around 170. If you invested a $100,00 each, When you sell now, you don’t have to worry about tax with Google but you would cough a lot if you own Apple. More over lot of people bought Apple when it was lower than 100.
      Not many stocks have multiplied like Apple. Apple was in 30’s in 2004 I believe!

      1. AAPL isn’t the only stock being sold before years end for tax purposes. It’s simply the only stock being mentioned on this an “AAPL” site. And other equities have gone up as much or more than AAPL. Long-term and this year. So please don’t beat the poor, poor pitiful me drum. It’s not some damn conspiracy! It’s not a sinister plot against AAPL. Apple is the biggest company out there so they get the most attention. Kind of makes sense doesn’t it? If it was Exxon Mobil or Sony or Ford it would be the same amount of attention. No one is picking on poor little Apple. C’mon, that shit gets old. Wake up, look around. People are selling equities left and right to beat the fiscal cliff and capital gains taxes. Not just AAPL. If Apple hadn’t shot up so high so fast it would get a little bit less attention. Obviously. Apple got the lions share of attention from the investing world for the last five years. So of course it’s going to get the lions share of attention now. This selloff in Apple is partially due to this tax issue. But it has affected all stocks. Profit is profit no matter which equity you own. Taxes are taxes no matter which equity you own. Folding money is green. A $50,000 profit is just as good in one company as another. Quit making excuses for Apple. It’s just a business. You don’t know them and they don’t know you. They’re not coming over for barbecue tonight. You can’t call them at 2 AM when your car breaks down on the side of the road. It’s a cold hard profit-making business that’s all it is. And that’s their job and they do it well. That’s why they’re the biggest company out there. At least for now. They’re not your best friend so you need not make excuses when they stumble. They’ll do just fine,or not, without the excuse making. Investing rule number one : never fall in love with a company. Investment rule number two : learn to take profit off the table at appropriate times.

        1. Here’s the deal, jackass. I bought AAPL in 2003 at $7.50. If I sell today I get taxed at 15% on the present price minus $7.50, or about $530.00 per share. That’s $79.50 per share. After 1/1/13 it’s more like $150.00 per share. Got it?

          1. Goodness Zeke, why are you so angry? Could it be that you are in reality, underwater rather than way ahead? Yeah, I think so. We can all look up when Apple was at its low point in the last 10 years Zeke. So don’t try to bullshit the crowd here, even fanboys, because nobody fucking believes you, cock sucker. We’re all sure that you’ve been sitting on the sidelines beating off while the rest of us who had any sense did buy Apple way, way back. So no Zeke, no one believes your bullshit story. And I would’ve been a little nicer especially since I didn’t address you Zeke. But in your anger, because of your stupid financial decisions, you have decided to vent toward the person who uses common sense. So fuck you Zeke. And here’s hoping that your losses are devastating. I got out at $700 Zeke. Looks like you were too stupid to do the same. But again Zeke, no one, but no one believes that you bought AAPL at $7.50. It must feel like a real kick in the stomach every time you look at the share price now Zeke. Because we’re all certain of one thing Zeke, you’re a liar. So suck shit through a dead pigs ass Zeke! Idiot.

          2. And oh by the way Zeke, if you paid attention to my original post you will notice that I did say that “this selloff in Apple is partially due to this tax issue”. Idiot. So we’re all confused as to why you felt the need to explain your selling Apple before taxes rise? Idiot. Millions of shares of Apple have been sold for two months due to the tax issue. So why would you be different? Idiot.It’s because you’re a fucking liar. You didn’t buy any AAPL at $7.50. Nice try. Idiot.

            1. Oh, struck a nerve, eh? Believe what you like. I’m comfortably retired. I don’t have to care what you believe. I’ll just keep collecting my Apple dividend every quarter and planning vacations. Cheers!

  4. Makes sense. I had to sell to buy a house but I would have sold it all just to be safe and know I’d only have to pay the 15% gain tax. Then I could buy back later. After quadrupling my investment going from 15% to let’s even say 30 would be a huge hit

  5. There is a hell of a lot more capital gain out there with AAPL than there is with either GOOG or AMZN. Take a look at the 1 year and 5 year stock prices to understand the comparison.

  6. Come on folks, do you imagine things could have been going along as it did forever?
    One day someone had to make the necessary changes to even think about having a future…
    So, stop crying over some probable losses, and think about your nation’s survival!

  7. IF you need the money then sell your stocks and pay the your rent (AKA TAXES) to the government for providing a stabile environment (infrastructure and services) to make profits in. Many of the things our government has made possible for us came from past generations. We haven’t been re-investing in those things domestically until Obama re-initiated those efforts. Yes, we have been building roads and schools, etc. internationally, such as Iraq and Afghanistan recently, so encourage your politicians to stop the war machine and re-habiliate our economy domestically.

  8. Pure speculation. Tax rates haven’t been lower in 2 decades. The mole hill of a cliff is just another phony excuse for companies and investors to do what they want to do anyway. Apple has new competition all the time, and that is being priced into Apple stock. Get used to it.

    Why is there no balanced budget amendment to the Constitution?

    So that lobbyist influence can continue to tip the playing field for the benefit of multinational companies at the expense of domestic producers (corporate welfare)?

    according to the WSJ, “Tax-dodgers are proudly un-American”

    http://articles.marketwatch.com/2012-05-04/commentary/31564933_1_rich-guys-unfair-tax-system-higher-taxes

    The “job providers” in the USA have forgotten that they have been the primary beneficiaries of the laissez-faire pro-corporate policies that ran up a steadily growing debt since the Eisenhower administration. Pay it off, dumbocrats and republidicks.

  9. Dear MDN,

    I think it’s time to turn off comments. We cannot be civil to one another on this site. Our passions are too acute and our political differences reflect the divide of the nation. Perhaps paid subscriptions for a pro service that includes comments and MDN editorials?

  10. If you would rather pay your capital gains now rather than in future years, you don’t have to divest your shares, just declare the gain. Are there no tax accountants reading this?

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