The Wall Street Journal's Peter Lattman, whose father went to summer camp with Ralph Lauren, also saw the tax angle on Ralph Lauren's sale of nearly $1 billion of his nearly $4 billion stake in Polo Ralph Lauren:
While Lauren is surely selling for diversification purposes, he's also offloading stock this year to avoid the tax hike set for 2011. On Jan. 1 the tax rate on long-term capital gains increases from 15% to 20%. Lauren presumably has virtually no cost-basis in his stock holdings. So on $1 billion worth of stock, selling now gives him an additional $50 milllion in after-tax proceeds. Look for a rush of sales in the coming months by other large holders of low-cost basis single stock positions and other long-term assets.
Mr. Lattman posted on this on June 15 at 2:42 p.m., more than a day before we got to the matter separately here. Kudos to him.