Elon Musk’s Sales of TeslaPeople who followed the stock market story for his entire life will not be surprised that stock was up last week. potential tax bill of $10 billion to $15 billion On stock options granted in 2012. Yet according to accountants, most of his sales don’t appear to be connected with taxes — which could mean he will unload far more stock than expected.

Musk’s options to purchase 23 million shares of stock expire August. This is the same deadline as the California tax bill and the Internal Revenue Service. Musk exercised his options in November 8. Musk exercised the options Nov. 8 with $2.5 billion worth of shares. He also sold $1.1 Billion to cover taxes

A footnote from his Securities and Exchange Commission said that “The common stock shares were purchased solely in order to satisfy the reporting individual’s tax mitholding obligations related to exercise of stock options.” filingFor Nov.

However, sales began to take a different turn on Nov. 9. He sold instead of as part of an options exercise. Musk started selling from his existing shares. Musk cannot use the existing shares to cover his tax due to their higher tax bills, according to accounting professionals.

Musk’s options can be taxed like ordinary income because they are compensation. Combining the federal and California rates could reach 54%. The strike price on the options is $6.24 per share, and Tesla’s stock price on Monday was over $1,600 a share, so he would pay higher taxes — more than $10 billion on his gain of over $20 billion.

In what is called a cashless exercise, executive sell their exercised shares right after being purchased. The shares can be sold instantly, so there’s no capital gains tax.

Musk would have to pay long-term capital gains tax of $1.3 billion because his stock sales starting Nov. 9, were without cost basis or in straight stock sales. Using those proceeds to pay the options tax would amount to paying taxes twice — once on the capital gains and once on the options.

Toby Johnston (partner in charge of Moss Adams Silicon Valley office), a wealth management, accounting and consulting firm, stated that “it wouldn’t make fiscal sense” for him not to use these proceeds for options tax.

Musk stated that selling option shares is more tax efficient than regular shares. Musk tweeted on Sunday that a careful observer would notice that my share sale rate (low basis), is significantly higher than my 10b option exercise rate (high basis), thus closer to tax minimization rather than maximization.

Given the relatively high tax rate, why would Musk sell non-option stock? Tesla analysts and tax experts agree that Musk will continue to exercise his options until August. If he lets them expire, it would leave billions of dollars on the table. This is in addition to the added ownership of Tesla, after all taxes have been paid. This means that he has billions of stock left to exercise, and billions more to sell in order to pay taxes.

He gets cash outrights for the $5.7 billion and any additional shares that he does not sell. Although he owes federal capital gains taxes, the sale of the shares and any additional non-option shares he sells are cash-outs. He is likely a Texas tax resident so he will likely not have to pay state income taxes. His options taxes are exempted from this rule, as they are employee benefits that he earned in California.

The sales won’t be for charity according to accounting professionals. He would have given appreciated shares instead of selling them first and then paying capital gains tax. Space X could use the funds for his private space venture or Space X. After years of being cash-rich but stock-strapped, he may want to remove the money from his pockets. He may also be more inclined to consider a cash out if federal taxes rise in the next year.

Musk, whatever the reasons may be, will most likely sell much more than the $10 billion- to $15 billion he need for taxes. He conducted a Twitter poll Nov. 6Then he asked his supporters whether they wanted him to sell 10% of his stock. The vote saw 58% responding that he should have 10%, which would translate into sales of over $20 billion.

Johnston stated that taxes don’t always drive investment decisions for people of his caliber. We may still not be able to see the whole picture, but it feels as though something is missing.