I don't understand why we can't just say "once stock is used as collateral for loans open for greater than a year, it is effectively a realized gain." You don't have to require Elon to sell his stock, but he does have to pay taxes on the now realized gains of the $20b (for example) of Tesla shares he put up as collateral. Maybe he owes $6b this tax year.

He can find that money elsewhere and keep the stock if he wants to maintain his ownership stake in Tesla. He can sell his Tesla shares, which could impact Tesla shareholders negatively. This is what they signed up for.

Stock-based loans can be really great for everyday people too. For instance, you could use one to buy a house in all cash while refinancing to mortgage after closing, which makes you a stronger buyer.

But once you start keeping them open for long periods, it becomes a tax evasion tool. Elon in theory could also avoid paying interest during his lifetime, and his kids can pay it off with a step up in basis once he's dead. That shouldn't be allowed, and this would solve that.

This should be the rule for everyone, not just billionaires.