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Important points
- Amazon founder Jeff Bezos announced three months ago that he returned to Miami, where he attended high school and where his parents still live.
- The move will help Mr. Bezos avoid the state-level 7% capital gains tax introduced three years ago in Washington state, where he has lived for many years.
- Mr. Bezos’ recent sale of large sums of Amazon stock follows a predetermined stock sale plan approved by wealthy company insiders.
Last week, Jeff Bezos unloaded more than 20 million shares of Amazon.com (AMZN), the company he founded in his Seattle garage 30 years ago.
He is following a predetermined plan available only to company insiders, and his recent cross-country move will result in lower taxes on his transactions.
Bezos, the former Amazon CEO and the world’s third-richest person, collected $6 billion between February 7 and February 14, according to filings with the Securities and Exchange Commission. A considerable amount of the company’s stock was sold.
This is the first time Bezos has sold Amazon shares since November 2021. While clearly a significant amount, the sale represented just 3.6% of Bezos’ Amazon stock. He still owns more than 952 million shares worth more than $160 billion.
Bezos sold the shares as part of a routine process to sell his stake in the company. And his recent move to Miami will likely reduce his tax burden in the process.
10b5-1 Play the game
On November 8, 2023, Bezos announced plans to sell up to 50 million Amazon shares by January 31, 2025. At the time, Amazon’s stock was trading at nearly $142 per share. It has since climbed to nearly $170.
His plan falls under the SEC’s 10b5-1 rule, which outlines the conditions that allow for written agreements between company insiders and securities firms to sell company stock. .
These agreements establish predetermined trading instructions that help the SEC pursue and defend companies and individuals from insider trading accusations.
Although the SEC typically limits 10b5-1 plans to company insiders who own at least 10% of the company’s stock, companies may also offer plans to employees who are not traditionally considered insiders. When Bezos started his plan, he owned 10% of Amazon’s outstanding stock.
Welcome to Miami (I’m back)
Six days before Bezos announced his 10b5-1 plan, he announced that he would be moving to Miami. He attended high school there in his early 1980s, and his parents still live in nearby Coral Gables. He reportedly purchased two properties worth a total of $147 million in Indian Creek Village, an island north of Miami Beach.
The move not only allows Bezos to return to his roots, but also allows him to avoid state taxes on the stock sale.
Florida and Washington are two of nine states that do not impose a state-level income tax. But while Washington state imposed a 7% capital gains tax at the state level three years ago, Florida has no such tax. That means Mr. Bezos saved an estimated $430 million in state taxes by switching coasts.
Other billionaires have flocked to Florida in recent years, including celebrity investors Carl Icahn and Josh Harris. Mr. Harris recently purchased the National Football League’s Washington Commanders franchise.
The 2019-20 analysis found that it’s not just billionaires. Families making more than $200,000 a year moved to Florida at four times the rate of other states.
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