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You donate your $100M of highly over inflated stock. You know that by the time you could really sell the stock (i.e. various restrictions in the grant terms), y

You donate your $100M of highly over inflated stock. You know that by the time you could really sell the stock (i.e. various restrictions in the grant terms), you'd get nothing close to $100M. Let's say you expect it to drop to $20M in 24mo. You just locked in the 'donation' tax write off amount at the peak value of the stock ($100M), but it can sit in your DAF for 2 years until you finally sell it for $20M (an give it to an actual charity). Going forward, you've got $100M your can deduct from your future taxes/income, that was only really worth $20M. You have effectively captured the value of the over inflated stock in the form of not paying any more taxes for a long time going forward. This is how the rich get out of paying taxes. ;)

Cyph0n 11y ago
Excellent explanation. What a smart technique.
- bkeroack 11y ago
  The really smart thing would be to donate[1] it to a "charity" you create and fully control (that your kids will inherit, etc) so it's effectively a tax-free bank account. 1. http://www.nytimes.com/2015/12/02/technology/mark-zuckerberg-facebook-charity.html http://www.nytimes.com/2015/12/02/technology/mark-zuckerberg...
Retric 11y ago
Another doge is you deduct the full value of stock and avoid capital gains. So, you reduce your income more than your net income you would have gotten selling your stock. AKA Let's say you get 75$ after state and federal capital gains on 100$ in stock ~(25% Tax). You deduct 100$ from your taxes not 75$ and you can deduct that 100$ from earned income which is taxed at ~40% federal + 13.3% state call it ~50$ in tax savings. Net result you donated 100$ to an organization of your choice at the cost to you of (75$-50$) ~= 25$. And don't forget you can call a lot of things charity's. http://www.fidelitycharitable.org/giving-strategies/tax-estate-planning/appreciated-securities.shtml http://www.fidelitycharitable.org/giving-strategies/tax-esta...

Cyph0n 11y ago

Excellent explanation. What a smart technique.

bkeroack 11y ago
The really smart thing would be to donate[1] it to a "charity" you create and fully control (that your kids will inherit, etc) so it's effectively a tax-free bank account. 1. http://www.nytimes.com/2015/12/02/technology/mark-zuckerberg-facebook-charity.html http://www.nytimes.com/2015/12/02/technology/mark-zuckerberg...

Retric 11y ago

Another doge is you deduct the full value of stock and avoid capital gains. So, you reduce your income more than your net income you would have gotten selling your stock. AKA Let's say you get 75$ after state and federal capital gains on 100$ in stock ~(25% Tax). You deduct 100$ from your taxes not 75$ and you can deduct that 100$ from earned income which is taxed at ~40% federal + 13.3% state call it ~50$ in tax savings. Net result you donated 100$ to an organization of your choice at the cost to you of (75$-50$) ~= 25$. And don't forget you can call a lot of things charity's. http://www.fidelitycharitable.org/giving-strategies/tax-estate-planning/appreciated-securities.shtml http://www.fidelitycharitable.org/giving-strategies/tax-esta...