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Its sad to see how these comments are going focus on this being a tax dodge. He is doing SOMETHING with 99% of his money for the greater good.

• amalag 11y ago
  Not necessarily. He has just moved it around. He is ANNOUNCING he will do something good. He could use all the money to bankroll candidates or invest in for-profit companies. Nothing has changed yet except that he can avoid estate taxes. He however has said he will do something "good".
  • loceng 11y ago
    Like Internet.org good?
  • jayess 11y ago
    As far as I understand, he wouldn't avoid estate taxes. Whoever dies last would still own the LLC as an asset and the estate is taxed on the value of that asset. With their combined estate tax exemption, about $10.5 million, any value over that would be taxed at 40%. Unless he remains true to his word and he expects to spend it all before he dies. The only "avoidance" of taxes happening here is during the initial transaction of transferring the Facebook shares to the LLC's ownership. Of course as the LLC sells shares that have gained value, the capital gain would be taxed, as would any dividends or growth from any other investments the LLC makes.
    • amalag 11y ago
      I don't want to be totally negative on Zuckerburg. Maybe he will do good with the money. However: An estate would not be taxed on the value of the LLC, the same way one he is not taxed on the value of his stock. It is taxed when sold. If he assigns family members as owners there would not be additional taxes when he passes away if the LLC's money continues to grow. >11. Limited Liability Company (LLC) and Family Limited Partnership (FLP) FLPs and LLCs let you reduce estate taxes by transferring assets like a family business, farm, real estate or stocks to your children now, and still keep some control. They can also protect the assets from future lawsuits and creditors. >Here's how they work. You and your spouse can set up an LLC or FLP and transfer assets to it. In exchange, you receive ownership interests. Though you have a fiduciary obligation to other owners, you control the LLC (as manager) or FLP (as general partner). You can give ownership interests to your children, which removes value from your taxable estate. These interests cannot be sold or transferred without your approval, and because there is no market for these interests, their value is often discounted. This lets you transfer the underlying assets to your children at a reduced value, without losing control. https://www.estateplanning.com/Understanding-Estate-Taxes/ https://www.estateplanning.com/Understanding-Estate-Taxes/
      • harryh 11y ago
        If Zuck "transfers assets like a family business, farm, real estate or stocks to his children now" then this transfer would, presumably, be far far in excess of the $14,000 annual exemption and thus subject to taxation. This LLC is not an effective way to avoid estate taxes on the vast majority of his wealth.
      • jstalin 11y ago
        That's not true. The estate would be taxed at 40% for any value of the LLC over about $10.5 million (today's estate-tax exemption). Family LLCs can work for reducing the estate tax if you transfer ownership interests during your lifetime at a reduced valuation, owing to the fact that the membership interests are not marketable, giving them a lower value than the market value of whatever the LLC holds. The only way you avoid the estate tax is if you transfer an asset to an irrevocable trust or your family members before the asset gains significant value. If you own, directly or indirectly, an asset that has significant value, it is taxed at death.
    • hvalika 11y ago
      Just a slight clarification -- there is no "avoidance" going on here. This is merely "deferral." Transferring the shares of any company to another company is often a tax free transaction (provided some basic rules are met) under Section 351 of the tax code. (This is Tax 101).
  • 33W 11y ago
    I'm wondering if investing in for-profit companies is a major influence of this decision. With this, the LLC can invest in solar startups, or obscure medical companies. As a philanthropic enterprise, no one expects it gain profits from its investments. As a LLC, it isn't limited in where the money can go.
• 6stringmerc 11y ago
  In some ways, yeah, but viewed in another light, it's sad to see the tax code so ridiculously complex and catering to the rich that a guy like Zuckerberg or Romney can effectively pay a lower tax rate on investments than a working-class citizen would pay on their direct wages. Sometimes there needs to be a 'poster child' to focus on as an example of when even doing something admirable leaves a bad taste in the mouths of many.
  • encoderer 11y ago
    Regular working class citizens can also pay lower taxes on their investments than on their own labor.
    • darkstar999 11y ago
      Regular working class citizens don't have investments for the most part.
      • encoderer 11y ago
        All the software developers on HN consider themselves rich then? To me, working class means you have to work to pay your bills. A lot of people in that category have investments in the stock market and in their home.
        • creshal 11y ago
          "A lot" is still a minority.
    • creshal 11y ago
      > pay lower taxes on their investments On all three pence? God bless America.
    • ldd 11y ago
      In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread. - Anatole France
• lagudragu 11y ago
  He could do something good with the 99% stock without using dodgy economics and PR stunts. That being said, let us see where this will turn out to.
• dudul 11y ago
  He is not doing something good yet, he announced their intention to do it, let's see what happens :)
• maxerickson 11y ago
  The point many people are making is that he so far is just reorganizing the way his money is held. Also, it's just an announced intention. And putting the money into the LLC isn't actually doing anything for the greater good. I tend to believe that he will end up using the new financial structure to do things that are for the greater good, but he hasn't yet.
• wpietri 11y ago
  > He is doing SOMETHING with 99% of his money for the greater good. Well, he has talked about doing something with his money that he thinks is for the greater good. I think it's reasonable to question the talk vs action part. And I think it's very worth asking whether his idea of the public good is the same as everybody else's.