Topping up, page-2

Bella, Your post yesterday about $5 in a year and to the moon after that got me thinking. It’s time to do some thinking about the best entity to hold shares that explode upwards like you were proposing for IMU.

Scenario 1. Buy and hold one million shares at .15 and hold for 5 years in a Super Fund or in a personal name. Assuming no other cash is available to pay tax. In 2025 at when new super taxes kick in IMU is worth $5.
At the 5 year mark they are worth $10.

Firstly the Super Fund pays tax in 2025.
And let’s assume/hope that Dim Jim does not make unrealised gains taxable under $3m. A few wild assumptions I know.

2025 Super Fund gets taxed $600k. So fund sells 120k IMU at $5 to pay tax. Super Fund now holds 880,000 IMU @ $5 =$4.4m.

Private holdings are still $5m.

2026 year IMU hits $7. Super Fund now has $6,160,000 whilst Private Holdings are
$7m. Super Fund now sells 135,500 shares to pay tax of $950,000. Leaving Super Fund with 745,000 IMU worth $5,215,000.

2027 IMU is trading at $8.50. Private Holdings are worth $8.5m. Meanwhile the Superfund needs to send Dim Jim some more honey to sweeten Jim’s political chances. Superfund balance is now $6,332,500 which has a tax obligation of $999,750. Super Fund sells 117,500 IMUs to pay Jim,

Super Fund now has 627,500 IMUs whilst private fund still has 1,000,000 IMU’s.

2028 and Bella has been proven correct. IMU hits $10. Super Fund is worth $6,275,000 whilst Private holdings are worth $10m. Super Funds have to pay Jim again. This time $982,500. So they sell 98250 IMUs at $10.

Now the Super Fund has 529,250 IMUs worth $ 5,292,500 . Meanwhile the private holdings are worth $10,000,000.

This is where it gets really complicated. It’s either time to settle up. Sell out or collect Dividends. Or perhaps a mix of both strategies.

Im busy right now. And I’ll need a pencil and paper to work the rest out. It’s a little difficult on my IPhone. So I’ll finish this later over coffee. That is unless some friendly accountant reading this would finish this off. At this point the Private Account hasn’t paid tax. The super Fund is nearly tax paid except for 15% of $1.25 million =$187,500. So Super Fund is now Tax Paid at $5,105,000

If the CGT discount still exists the private account has $5,075,000 Tax Free money, with tax owing on $4,925,000.

Back soon to finish this off