You periodically borrow $10M from the brokerage using the stock as collateral. They charge 0.25% (i.e., a few percent below inflation) and no minimum payments with the understanding that you will not move your assets.
At some point (well above 0.25%) it’s clear that a special rate is being offered that is no longer an arms length loan (IRS Part 1 Section 7872) and the imputed rate will be applied as if the difference is an interest payment from the bank to the customer.
But let’s say the client gets 4% instead of the normal 5.5%. If they never pay it back it only takes a few years before they pay more in interest than they would have paid in capital gains taxes.
It’s a “loophole” that nobody uses to avoid taxes for a lifetime.
Do they? I wouldn’t be surprised if their margin was 0.25% but they‘d still be charging it on top of the benchmark rate (~4.8% now) otherwise they’d be losing a lot of money overtime