Angelos wanted two year lease extension

[spiritof66]

55 minutes ago, Going Underground said:

Looks like the estate tax would be 16% in Naryland. Plus do they have a living trust and other things that could reduce the tax rate for Federal and State.

MARYLAND ESTATE TAX RATES
Taxable Estate*	Base Taxes Paid	Marginal Rate	Rate Threshold**
$0 – $40,000	$0	0%	$0
$40,000 – $90,000	$0	0.8%	$40,000
$90,000 – $140,000	$400	1.6%	$90,000
$140,000 – $240,000	$1,200	2.4%	$140,000
$240,000 – $440,000	$3,600	3.2%	$240,000
$440,000 – $640,000	$10,000	4.0%	$440,000
$640,000 – $840,000	$18,000	4.8%	$6400,000
$840,000 – $1.04 million	$27,600	5.6%	$840,000
$1.04 million – $1.54 million	$38,800	6.4%	$1.04 million
$1.54 million – $2.04 million	$70,800	7.2%	$1.54 million
$2.04 million – $2.54 million	$106,800	8%	$2.04 million
$2.54 million – $3.04 million	$146,800	8.8%	$2.54 million
$3.04 million – $3.54 million	$190,800	9.6%	$3.04 million
$3.54 million – $4.04 million	$238,800	10.4%	$3.54 million
$4.04 million – $5.04 million	$290,800	11.2%	$4.04 million
$5.04 million – $6.04 million	$402,800	12%	$5.04 million
$6.04 million – $7.04 million	$522,800	12.8%	$6.04 million
$7.04 million – $8.04 million	$650,800	13.6%	$7.04 million
$8.04 million – $9.04 million	$786,800	14.4%	$8.04 million
$9.04 million – $10.04 million	$903,800	15.2%	$9.04 million
$10.04 million and up	$1,082,800	16%	$10.04 million

"Living trust" is a term that gets tossed around to mean a number of different things, but recently it typically refers to the way in which an estate is passed on, as an alternative to a will that avoids probate. That kind of living trust does not avoid estate taxes.

My memory is that Lou's lawsuit made no reference to any significant tax avoidance trust. FRom memory, there are trusts set up for Peter's care and for Georgia, but I think those were recent so there would be little tax avoidance. 

[Ripken]

24 minutes ago, spiritof66 said:

Thanks for the advice about Maryland law. I practiced law for 35-plus years, but never in Maryland. I'm very familiar with the federal estate tax.  The top marginal rate is 40 percent, which kicks in after exemptions at under #30 million.; when you're in the billions, the exclusions and lower effective rates are immaterial. So there's a 40 percent federal estate tax. Years ago, in going through this, I looked closely at the Maryland estate tax. I forget how Maryland works, but I thought it was 10 percent, and each tax opertes without a credit for the other. It looks like I was wrong, or there's been an increase, and Maryland's top marginal rate is 16 percent, in which case the tax obligation I estimated may be too low. I think the value estimates I used are pretty reasonable. The $400 million guess for non-Oriole assets still owned by Peter Angelos may be high, and if that's the case the situation would be worse since there would be less cash outside the Orioles to pay taxes without selling the team.

I don't mind being wrong in a context like this because it gives me a chance to learn something. How am I wrong? Wrong value estimates? Wrong tax rates? Wrong that there's a way to pay the estate taxes without selling the team? What's your analysis that leads to a different conclusion? I'm interested in how you see this. That's how we learn from one another. 

Very interesting.  Thanks.  As has been mentioned though, doesn't all this happen when she dies (and not just him)?  I know he's close to the end but she could be around for 20 years.

[spiritof66]

4 minutes ago, Going Underground said:

Since you seem to know more about taxes then me, I know certain stocks and other assets have a step up basis ,so a person who lets say sells a stock they pay the difference of what the stock is worth when they received it after death and not what the deceased  person paid for it. Probably would be no step up basis for a sports team. But trusts ,like living or other trusts might also save a few dollars.

There is a step-up for all assets (there may be some exceptions I'm not aware of). That's why the Orioles won't be sold until Peter Angelos dies. If the team were sold today, Peter (that is, his estate) would have to pay hundreds of millions in capital gains tax:  20 percent in federal  income taxes plus Maryland income taxes on his gain. I've seen the total for Marylanders' capital gains taxes estaimated at 30 percent. As a rough estimate, that capital gains tax could be $300 million. If Peter owns the team at his death, his estate gets the benefit of the step-up and there is no capital gains tax. 

But there's no way to avoid the enormous estate taxes, unless Peter gives his assets, including his interest in the Orioles, to a charity. He could defer the tax by leaving everything to his wife, but it's hard to imagine MLB would approve that, and according to Lou's lawsuit Peter's will leaves the team to John and Lou. There are ways to reduce those taxes by having assets appreciate outside the estate (in a trust), but it doesn't aopear that Peter has done that with the Orioles.

 

[spiritof66]

11 minutes ago, Ripken said:

Very interesting.  Thanks.  As has been mentioned though, doesn't all this happen when she dies (and not just him)?  I know he's close to the end but she could be around for 20 years.

The estate tax would be deferred insofar as he leaves his assets to his wife. But Lou's lawsuit says that Peter's will divides the Orioles (and most of Peter's other assets, as I recall) to the sons. And I don't think MLB would approve of the team being transferred to Georgia and being stuck with a lame-duck John Angelos for another decade or so. But all indications are that Peter didn't do things that way, and I don't see how he could change his will now, years after being declared incompetent. 

[Frobby]

1 hour ago, Going Underground said:

Since you seem to know more about taxes then me, I know certain stocks and other assets have a step up basis ,so a person who lets say sells a stock they pay the difference of what the stock is worth when they received it after death and not what the deceased  person paid for it. Probably would be no step up basis for a sports team. But trusts ,like living or other trusts might also save a few dollars.

I think you’re confusing income tax and estate tax. The inheritors of assets receive a “stepped up” basis, so neither they nor the estate pay income tax on gains that occurred while the deceased person was alive.  But, the estate tax is payable on the market value of the assets when the deceased person died.  And, estate tax rates are very high once you get beyond the exempt thresholds.

[bigdan]

16 hours ago, Going Underground said:

Looks like the estate tax would be 16% in Naryland. Plus do they have a living trust and other things that could reduce the tax rate for Federal and State.

MARYLAND ESTATE TAX RATES
Taxable Estate*	Base Taxes Paid	Marginal Rate	Rate Threshold**
$0 – $40,000	$0	0%	$0
$40,000 – $90,000	$0	0.8%	$40,000
$90,000 – $140,000	$400	1.6%	$90,000
$140,000 – $240,000	$1,200	2.4%	$140,000
$240,000 – $440,000	$3,600	3.2%	$240,000
$440,000 – $640,000	$10,000	4.0%	$440,000
$640,000 – $840,000	$18,000	4.8%	$6400,000
$840,000 – $1.04 million	$27,600	5.6%	$840,000
$1.04 million – $1.54 million	$38,800	6.4%	$1.04 million
$1.54 million – $2.04 million	$70,800	7.2%	$1.54 million
$2.04 million – $2.54 million	$106,800	8%	$2.04 million
$2.54 million – $3.04 million	$146,800	8.8%	$2.54 million
$3.04 million – $3.54 million	$190,800	9.6%	$3.04 million
$3.54 million – $4.04 million	$238,800	10.4%	$3.54 million
$4.04 million – $5.04 million	$290,800	11.2%	$4.04 million
$5.04 million – $6.04 million	$402,800	12%	$5.04 million
$6.04 million – $7.04 million	$522,800	12.8%	$6.04 million
$7.04 million – $8.04 million	$650,800	13.6%	$7.04 million
$8.04 million – $9.04 million	$786,800	14.4%	$8.04 million
$9.04 million – $10.04 million	$903,800	15.2%	$9.04 million
$10.04 million and up	$1,082,800	16%	$10.04 million

16% in Maryland.

0% in Tennesse.

Just saying.

[accinfo]

19 minutes ago, bigdan said:

16% in Maryland.

0% in Tennesse.

Just saying.

Well you would have to move Peter Angelos to TN before he passes to avoid MD estate tax.

[Going Underground]

4 hours ago, accinfo said:

Well you would have to move Peter Angelos to TN before he passes to avoid MD estate tax.

But wouldn't his tangible asset,the Orioles still be in Maryland?

[86this]

I don't think I saw an update on here regarding the extra $300 million.

https://www.cbsnews.com/baltimore/news/development-rights-extra-300-million-reportedly-off-the-table-in-os-lease-talks/