Steve Jobs’s Death Could Cost His Widow Almost $1B In Taxes

Steve Jobs’s Death Could Cost His Widow Almost $1B In Taxes

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For the widow of Apple co-founder Steve Jobs, the saying about death and taxes being life’s only certainty probably rings true — particularly taxes. Laurene Powell Jobs learned she must pay $867 million in capital gains taxes and is being advised to unload millions of Disney and Apple shares worth nearly $7 billion.

According to Bloomberg, Powell Jobs also faces a 2013 deadline when capital gains taxes rise from 15 percent to 20 percent, as well as a potential 3.8 percent tax on unearned gains from the sale of shares. Jobs owned 5.55 million Apple shares worth $2.05 billion and 138 million Disney shares valued at around $4.74 billion.

Although before his Oct. 5 death Jobs put the shares in a trust to avoid probate taxes, his estate will likely be spread among his widow and their four children. Ironically, Powell Jobs has a master’s degree in business administration from Stanford University.

In what could be the Wall Street version of a tag sale, unloading the shares could face problems, particularly for Disney. The 138 million shares Jobs owned represents 12 times the company’s average daily trading volume, making it more likely an institutional investor, such as a hedge fund, may grab the shares, Bloomberg reports. There could have been even more Disney shares available before the animation giant bought back $5 billion worth of Jobs’s stock in fiscal 2011.

As for Apple, Powell Jobs could easily sell shares of the iPhone and iPad maker without making much of a ripple in the open market. His 5.55 million wouldn’t make a dent in the 17.6 million shares traded each day.

But no matter the buyer, the sell-off likely runs counter to Jobs’s image as a counter-culture icon who scoffed at traditional business. Then again, dumping more than a 100 million shares on Wall Street is a memorably chaotic send-off in its own right.

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  • John Neumann

    Any day I am obligated to pay almost $1 billion in taxes and not have it affect my lifestyle 1 iota is a good day in my book. 

  • nthnm

    Why is it ironic that she has a Masters in Business Admin? She’s likely not a tax lawyer nor is she an accountant. Even if she did learn these things in her various accounting and financial math courses, that was more than 20 years ago. I haven’t used my accounting knowledge from receiving my degree 5 years ago and I forget much of it.

  • JayeDee369

    okay, I’m not an investment wiz or anything, I’m just doing basic math…if she owes $875 million in taxes and her combined investments are worth $7 billion, why would you dump it? I mean, $875 million wouldn’t break her if she has $7 billion. Doesn’t add up and whoever is telling her to do this either isn’t very good or is trying to pocket some money on the side. But like I said, I’m not in investment so I could be wrong.

  • Demonstr8r

    Taxing children that inherit money from relatives is just plain wrong, but taxing the window or widower is simply organized crime!

  • imajoebob

    Horrible, HORRIBLE post.  Was this written by Herman Cain’s “economist?”

    Another example of a little knowledge being a dangerous thing.  Under normal circumstances, she doesn’t have to pay a dime if she leaves the shares intact.  There’s no difference in the value/cost of Jobs’ estate before and after his death.  These “costs” were always there, and would have to be paid if the shares were sold before he died.  She/the estate still own shares worth almost $7 billion, and she doesn’t owe anyone anything for it.  Not a single penny.

  • tiresius

      Of course, some of the shares could be used to establish a foundation or donated to a 501(c)3, thus reducing or avoiding capital gains taxes.  The charity receives the full market value, the donor receives the full amount as a deduction (within applicable rules), and the tax liability is reduced.

      After all, pretty sure that his beneficiaries can make do with only a portion of the estate, and I suspect any estates attorney has already been providing similar advice.

  • Michael

    Did you even read the article you are referring to an quoting from?  The author calculated capital gains tax of $867 million IF Jobs had sold the shares while he was alive.

    There is no capital gains tax on pre-death appreciation under current tax law.  So, his family can avoid that tax in exchange for paying estate tax — whenever it comes due under his estate plan, likely on his wife’s death or later.

  • Guest

    I think Death tax is wrong all around.  The money has already been taxed once.  

  • Ashely8758

    @readers:disqus  my best friend’s step-aunt makes $86 an hour on the computer. She has been fired for 3 months but last month her income was $7968 just working on the computer for a few hours. http://cgx.me/sO7KD

  • CharliK

    Even if it is true, given how much Jobs was worth and his wife likely gained, I’m not sure that $900million in taxes really bugs her that much. She might be more than willing to pay it without any real fuss or playing games like donating huge chunks just for the tax cut etc. After all, it’s only money. 

  • David Clark

    If Ron Paul had his way, this would not be an issue.

  • imajoebob

    Try reading up on a couple things before you comment. First, how estate taxes work; second, capital gains taxes; third, the history and reasons behind estate taxes; and fourth the asinine ideas that spawned the “double-taxation” idiocy.

  • JayeDee369

    Okay, I’d like to thank Michael, Tiresius and imajoebob-All of you have kinda proved my point and I’m happy that simple math still applies. And you all are correct, the writer needs to get his facts correct before putting such nonsense out there in the open like that.

  • Nejohnso

    Cult of Mac, please fix this post to reflect reality.  I can’t believe how incorrect this is.

  • ctt1wbw

    All of you are just plain wrong.  That is the government’s money, not hers.  She didn’t earn it, it all belongs to Obama so he can give it back to Solyndra’s employees for retraining.

  • RaycerXray

    This is a perfect opportunity to get a nice tax write-off by giving the bulk of it to charity.

    On the other hand, I’m amazed at how many people will defend the rights of the mega-rich to be able to keep all their money. Who cares? Before and after taxes the Jobs family will still be mega-rich. They won’t even know it’s gone.

  • Guest

    You assume I don’t know what I am talking about, without realizing that I am fully aware of such things, and simply passing a comment regarding estate taxes.

  • Aaron_1995

    Ed Sutherland needs to quit referring to himself as a “journalist.”

  • Demonstr8r

    You assume I don’t know what I am talking about, without realizing that I am fully aware of such things, and simply passing about estate taxes, which has mostly been levied as the result of war and conflict.

    “In the early 20th century, worldwide conflict cut into trade tariffs–a mainstay of federal revenues–and Congress turned to another revenue source. The Revenue Act of 1916, which introduced the modern-day income tax, also contained an estate tax with many features of today’s system. After an exemption of $50,000 (over $11 million in terms of today’s wealth), tax rates started at 1 percent and climbed to 10 percent on estates over $5 million (over $1 billion in terms of today’s wealth). Estate taxes were increased in 1917 as the U.S. entered World War I.

    However, this time the estate tax did not go away after the war ended. Despite sizable budget surpluses, Congress increased rates and introduced a gift tax in 1924. Like the estate tax, the gift tax is a levy on the transfer of property from one person to another. During the 1920s through the 1940s, estate taxes were used as another way to attempt to redistribute income.”

  • winski

    And you know what… I don’t think she cares. It’s only vultures like you and others that think in these terms. Most, don’t actually give a crap what you think.

  • Gus

    Whatever they decide to do with that, Solyndra or not is fine by me. At least it’s not going to Haliburton or Blackwater.

  • freediverx

    I’m sure she and her family can afford pretty much anything they want, regardless of how large their tax bill is. With this much wealth, only an asshole would complain about taxes considering how much the other 99.9% of the country lives on.

  • freediverx

    400 Richest Americans – Income vs. tax Burden Over Time

    http://www.rollingstone.com/as

    US Presidents’ Contribution to National Debt

    How-did-the-US-Get-to-14.3-Triilion-in-Debt-by-President-by-Percent-Contribution.png

  • vistarox

    They’re rich enough. I say that we should tax the rich more. 

  • MarioWario

    I don’t think it’s worth it to reflect about charged taxes – you keep something and you get something. The Jobs’s family is surely aware of necessary transactions to be made – at last in the average business (it’s less damaging than HP’s 20% shares cut – caused by Leo A.) you have always make deal with 20% cuts or spikes (in yogic words: be calm no matter if you win or lose). 

    … and even Larry E. don’t burn 5 billion dollars for personal use – it’s always invested money (to move something – as long you don’t buy rockets (oneway-investment) or buy gold (generates nothing in the economy)).

  • cassandralite

    Well, if you’re going to base the legitimacy of a complaint according to how the rest of the people live, then I assume you never complain about your own station.  Compared to the rest of the world, Americans live like royalty. 

  • dagamer34

    Death and taxes, can’t avoid ‘em!

  • JohnJohnJ

    Author, what a bizarre article. Was this really newsworthy?

  • Gustav Sundh

    Rest of the world?? Yikes…

  • imajoebob

    Knowing historical fact and understanding it are entirely separate, as you have admirably demonstrated.

  • superjessi

    Estate taxes were actually introduced so as to not allow a single family to amass enough wealth to become royalty, which is specifically the basis upon which the US was founded.

  • Rob Lawton

    Who is ‘Powell Jobs’ – Surely you meant Laurene Powell? 

    Powell is her surname not her first name!

  • skippykawakami

    This blog post makes zero sense. The Bloomberg article you reference doesn’t claim that Laurene Powell Jobs must pay $867 in capital gains taxes. In fact, it actually says exactly the opposite: “Under U.S. law, Jobs’s heirs may sell Apple and Disney and avoid $867 million in capital gains taxes.”

    Moreover it sounds like the estate tax isn’t much of an issue right now either: “If Apple’s late co- founder left his estate to his wife, Laurene Powell Jobs, the family won’t be liable for the 35 percent estate tax until she dies or gives money to others, according to estate planners.”

    Further, I see no evidence that she’s being “advised to unload millions of Disney and Apple shares worth nearly $7 billion.”. The Bloomberg post only quotes people that suggest that it’s a good idea, but have no direct connection with Powell Jobs or the Jobs estate, hence none of the people quoted are in any way advising her in any real capacity. And even if they were, for the most part the suggestions are based around diversification rather than taxation

    And what on earth do you mean by “Ironically, Powell Jobs has a master’s degree in business administration from Stanford University”? How is this ironic? Are MBAs immune from taxation? Is she somehow taking actions outside the norm expected of an MBA? The irony, perhaps, is that this blog post confuses an MBA with a CPA, but if so, the sentence still makes no sense.

    What I find ironic is that the misuse of the term “ironic” has become so prevalent that it’s no longer ironic.

About the author

Ed SutherlandEd Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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