3 ms·

Yeah, but at that point, ABC shares are basically cash money--they may as well be Treasury Bonds given how liquid they are. She could easily sell half to cover

• zaroth 10y ago
  Liquidity of the shares is not in question. If the tax rate is over 50%, you have two choices; sell the shares and keep < 50 cents on the dollar by realizing the gain, or you can donate the shares to your Charitable Fund, and carry the charitable deduction against future income. The next year when you earn $XX millions, half of that is now tax free because the charitable deduction carry-forward. Dollars which otherwise would have been taxed at > 50 cents on the dollar. Selling the shares is worth < 50 cents on the dollar, but the charitable deduction is worth > 50 cents on the dollar because of the future tax liability that it eliminates. That is why I say it is "worth more as a donation". By donating $150m to the Fund, you not only get the self-directed Fund with $150m dollars in it (which is a fun time in and of itself) but you also get $150m in charitable deductions. Each dollar of that deduction eliminates > 50 cents on the dollar of tax liability. Donating to the Fund effectively lets you have your cake and eat it too, again, with the caveat that you expect to have enough future income to use it all up, while remaining in the highest tax bracket.