IRAs simply cant have assets contributed to them, only USD cash. With that USD they can purchase anything.

Additionally, stock options aren’t relevant here when it can also just buy shares directly, easy when you have executive authority over the company to sell shares.

Thiel had under 10% ownership of PayPal quick enough that year to comply with regulations (he had 3.5% ownership in 2002 when it was sold)

OR Thiel paid the penalty of $2,000 (100% penalty if transaction not undone) and didnt unwind the transaction, and still appreciated all the upside

OR the IRS took too long to discover the issue to levy the $2,000 fine

Doesn’t matter we don’t have the details, those are the possibilities and universe of consequences

If you're arguing that these stock units were purchased when the "company" was created in 1998, then you're talking about Confinity (not "PayPal"), which only had 3 founders. Thiel was clearly a >10% shareholder at the time. Or are you trying to argue that Thiel had a 0% stake, because his IRA had all of his stake?

You're using a 3.5% number from 3 years later, after merging with x.com, and raising ~$170M.

> OR Thiel paid the penalty of $2,000 (100% penalty if transaction not undone) and didnt unwind the transaction, and still appreciated all the upside

This is the biggest cop-out excuse of "valid". By this logic I can sell myself (into my Roth) all of my assets every year for $1, pay a $1 penalty, and everything is a-okay.

The other side of the logic is that the ownership percentage can be bound to the tax year instead of just the moment of the transaction. So you would be using an average % ownership which could have changed rapidly.

And of course there is the simple reality that he paid a $2000 fine

The financial engineering has always been available, obviously for 20+ years, many people just hadnt been inspired to do it until now. There are plenty of similar possibilities available that considers multiple state paths of value to generate massive returns.

But tax details are private and between Thiel and the IRS.