And, at least in theory, the companies couldn’t be big: They had to have “gross assets” of $50 million or less at the time of the investments. Industries like architecture and accounting were excluded. To be eligible for the tax break, investors had to hold the shares for at least five years. It allowed investors in eligible companies to avoid half the taxes on up to $10 million in capital gains (it would later be changed to eliminate all taxes on the $10 million) or 10 times what the investors paid for their shares. Bumpers was friends with his fellow Arkansas Democrat, President Bill Clinton, whose new administration embraced the cause within weeks of taking power. ![]() ![]() ![]() “But when you get smart tax lawyers in the room, the provision becomes, in practice, preposterous.” is an example of a provision that is on its face already outrageous,” said Daniel Hemel, a tax law professor at the University of Chicago. Then creative tax specialists at law, accounting and Wall Street firms transform it into something far more generous than what lawmakers had contemplated. Congress enacts a loophole-laden law whose benefits skew toward the ultrarich. The story of the tax break is in many ways the story of U.S. A Roblox spokeswoman declined to comment. A Lyft spokesman said the company’s two co-founders didn’t take the tax benefit. Representatives of those companies declined to comment or didn’t respond to requests for comment. So have partners at top venture capital firms like Andreessen Horowitz, who have figured out ways to claim tens of millions of dollars in tax exemptions for themselves and relatives year after year, according to industry officials and lawyers. ![]() Early investors in some of Silicon Valley’s marquee start-ups - including Uber, Lyft, Airbnb, Zoom, Pinterest and DoorDash - have all replicated this tax exemption by giving shares to friends and family, according to people who worked or were briefed on the tax strategies.
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