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Bond-Guru Bill Gross Barters For Rare Stamp

According to Forbes magazine, Bill Gross is among America�s richest 400, with a net worth of $1.1 billion. The 61-year-old financier is Pimco�s chief investment officer and earns a $40 million annual salary.

In The Wall Street Journal, a recent article (December 29, 2005) reported that Gross did a rather unusual simultaneous barter with some of his assets by trading a block of four rare 1918 stamps for another very unique stamp, an 1868 Z-grill depicting Benjamin Franklin.

Reportedly, Gross had bought his block of four stamps, which depicted an upside-down biplane, only two weeks before the $2.97 million trade. The Z-grill, which was owned by Donald Sundman, president of Mystic Stamp Co., had been purchased in 1998 for $935,800 as an investment. The stamp�s value had since climbed to nearly $3 million with the trade.

The bartered swap would never have come about without a trade component, because Sundman wanted to avoid taxes on the large profits that would accrue from a sale. Therefore, a barter transaction was structured to comply with the 1031 rules for �like-kind� trades of similar assets. Such a strategy allows participants to defer capital-gains taxes when they replace business or investment assets with similar property of equal or greater value.

For years, investors have used 1031 exchanges primarily for real estate. But as people grew familiar with the tactic they began diversifying into a wider variety of investments assets, as did Bill Gross.

Other types of properties being exchanged today include art, collectibles, private jets, classic cars, yachts, copyrights, and race horses
 



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