Irs Form 6251: Fill & Download for Free

As other answers have noted, the US has no federal wealth taxes. Such a tax has been proposed by politicians on the left wing of the Democratic Party, but a federal wealth tax might be declared to be unconstitutional, and European countries with wealth taxes have found them to be difficult to administer (see Charles Knouse's answer to Why can't a wealth tax solve our problems? for details).So under current US federal taxes, Musk and other wealthy investors only pay income tax on their salaries and other compensation and capital gains from stock sales. Tesla reported in their June 2019 SEC Schedule 14A proxy statement (https://ir.tesla.com/static-files/dc39dc01-6407-4bbc-aa58-d53a51ba2612) thatMr. Musk’s base salary reflects the current applicable minimum wage requirements under applicable California law, and he is subject to income taxes based on such base salary. Mr. Musk, however, has never accepted and currently does not accept his salary.The proxy also states that Musk’s primary compensation is in stock options, granted based on specified performance goals for Tesla. The 2012 CEO Performance Award included 5,274,901 shares and the 2018 CEO Performance Awards included 20,264,042 shares at a price of $350.02 per share (EDIT: I had previously erroneously treated these options as grants). These stock options are divided in tranches awarded over time when intermediate goals are met. As of 2019, 9 out of 10 of the 2012 award tranches had been awarded. The 2018 award is split into 12 tranches, where the first has been awarded (Elon Musk reaches first Tesla compensation award worth nearly $800 million), and the second appears to be imminent (Elon Musk about to get another $1.8 billion payday from Tesla ).Tesla very recently announced a 5–1 split (Tesla Announces a Five-for-One Stock Split | Tesla, Inc.), so I believe unexercised options from these performance awards would be multiplied by 5, for a total of 101,320,210 shares, and the option exercise price divided by 5, or $70.00/share. So the total 2018 award at today’s (Sep 3, 2020) stock price would be worth:101,320,210 shares x ($413 - $70)/share = $34.7 billionI am not a tax expert, so my understanding of applicable tax laws might be incorrect. (EDIT: previously I had assumed the entire grant value was immediately taxable, which was wrong). I believe Musk would not have to pay normal income tax on the difference between the fair market value (FMV) and the option exercise price if he did not sell the stock within a year of the option exercise. But he may very well be liable for Alternative minimum tax (AMT). According to IRS Publication 525 (2019), Taxable and Nontaxable Income:For the AMT, you must treat stock acquired through the exercise of an ISO (incentive stock option) as if no special treatment applied. This means that, when your rights in the stock are transferable or no longer subject to a substantial risk of forfeiture, you must include as an adjustment in figuring alternative minimum taxable income the amount by which the FMV of the stock exceeds the option price. Enter this adjustment on line 2i of Form 6251. Increase your AMT basis in any stock you acquire by exercising the ISO by the amount of the adjustment. However, no adjustment is required if you dispose of the stock in the same year you exercise the option. See Restricted Property , later, for more information.This is why wealthy people have tax attorneys.If Musk held onto the stock for longer than a year, and then sold it, he would have to pay long term capital gains of 20% of the sale price - option exercise price.Note well that all of this discussion is about income, not wealth. Before the second 2018 tranche, Musk owned about 20% of Telsa, which today has a market cap of $385 billion, so his Telsa stock is worth about $77 billion. This also does not include his share of SpaceX, which is not (yet) publicly traded. One recent article valued SpaceX at $36 billion (Revisiting SpaceX’s $36-Billion Valuation After Its First Manned Mission), and Musk owns about half of SpaceX. I don’t know if Musk gets any current income from that investment, but I assume it must be small compared to his Telsa compensation.Musk also owns (or at least did own) real estate in California and (I presume) elsewhere. He would be subject to local property tax (which is a wealth tax) and capital gains tax when the property is sold. He supposedly is selling off all of his real estate: Elon Musk just listed 5 more mansions for sale after pledging to 'own no house.' Take a look at the $100 million real estate portfolio he'll have to offload to make that happen.