3 ms·

You can't donate money in place of paying taxes; for a toy model let's say this person spent $10 to buy bitcoin long ago, now it's worth $140,000,010, he wants

by zodiac 8y ago

You can't donate money in place of paying taxes; for a toy model let's say this person spent $10 to buy bitcoin long ago, now it's worth $140,000,010, he wants to completely exit his exposure to bitcoin. If he converts it to cash now it he has to pay taxes on $140m of capital appreciation. Let's say he donates $55m worth of bitcoin to charities. If he wants to convert the remaining $85m worth of bitcoin to cash, he still has to pay taxes on that. Hence by making a donation, he reduces the amount of cash he ends up having. So how is there "no generosity"? Can you construct a scenario where someone ends up with more cash by making a donation?

ikeboy 8y ago
No, but you can have a scenario where you give say $10 million, but only end up with 1.2 million less cash after the donation. See https://avc.com/2018/05/giving-publicly-traded-stock-to-charity/ https://avc.com/2018/05/giving-publicly-traded-stock-to-char...
- hypersoar 8y ago
  Oh...kay? If you could end up with $1.2 million more in cash after the donation, then you'd have an argument. But in your example, the donor has facilitated an additional $8.8 million from the government, which I don't necessarily see a problem with. I certainly don't see a moral problem with it on the part of the donor. On the contrary, if you can get anybody to match you %700, then the moral case for giving to charity is only strengthened.
- maxerickson 8y ago
  You are still losing access to $10 million dollars of value. I can see taking issue with the forgone taxes or whatever, but a $10 million stock donation doesn't keep any extra money in your pocket (which is the scam proposed in the WOT above, that big donations somehow are profitable).
- zodiac 8y ago
  Yes, and I would argue that under any reasonable way of quantifying generosity your generosity would be "measured" at around $1.2m, and qualitatively I think it is fair to apply the term "generous" to you. An isomorphic situation is if Congress passed a law matching at a 1.2:8.8 ratio every charitable donation made to Watsi, and next year you donate $1.2m to Watsi; you end up with $1.2m less, Watsi ends up with $10m more.
deleted 8y ago
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taysic 8y ago
Here's an explanation I saw once before of how the wealthy save money by donating to their alma mater: 'So what an individual can do is offer to donate, say, 10% of his company to a charity. Let's say that the company did really well last year so that guy can easily find an accountant to say that 10% is worth $10M. So the guy has a $10M tax deduction he can use as he sees fit (subject to AMT and other shit, but you get the point). The guy also knows that last year's performance was a blip and if he repeated that 10% donation this year, he'd only get a valuation of $5M. In effect he's got an extra $5M from the valuation. When I was younger, I was on the young alumni board for the university I went to for undergrad and we used to see this all the time. Someone would donate property/illiquid securities/art/etc with an 'assessed' value of (say) $10M, but when the school went to sell it, they'd only realize (say) $3M in cash. But the guy would still get to keep the $10M tax deduction. To a guy like that, a $10M tax deduction could be worth $4m to $5M easily. I'm sure you're wondering, and yes this is in that 'gray zone' that's just millimeters from being tax fraud. However, the IRS rarely pursues these cases 1) because they are really hard to win, 2) the school doesn't really care b/c they still just got a $3M donation, and 3) the school isn't going to 'help' the IRS (beyond bare minimum compliance) b/c the school would have to give up the $3M.'
- zodiac 8y ago
  Ah, so this is the case when the company is "valued" at $100m but you can't actually sell any stock at that price, right?

by zodiac 8y ago

ikeboy 8y ago

No, but you can have a scenario where you give say $10 million, but only end up with 1.2 million less cash after the donation. See https://avc.com/2018/05/giving-publicly-traded-stock-to-charity/ https://avc.com/2018/05/giving-publicly-traded-stock-to-char...

hypersoar 8y ago
Oh...kay? If you could end up with $1.2 million more in cash after the donation, then you'd have an argument. But in your example, the donor has facilitated an additional $8.8 million from the government, which I don't necessarily see a problem with. I certainly don't see a moral problem with it on the part of the donor. On the contrary, if you can get anybody to match you %700, then the moral case for giving to charity is only strengthened.
maxerickson 8y ago
You are still losing access to $10 million dollars of value. I can see taking issue with the forgone taxes or whatever, but a $10 million stock donation doesn't keep any extra money in your pocket (which is the scam proposed in the WOT above, that big donations somehow are profitable).
zodiac 8y ago
Yes, and I would argue that under any reasonable way of quantifying generosity your generosity would be "measured" at around $1.2m, and qualitatively I think it is fair to apply the term "generous" to you. An isomorphic situation is if Congress passed a law matching at a 1.2:8.8 ratio every charitable donation made to Watsi, and next year you donate $1.2m to Watsi; you end up with $1.2m less, Watsi ends up with $10m more.

deleted 8y ago

[deleted]

taysic 8y ago

Here's an explanation I saw once before of how the wealthy save money by donating to their alma mater: 'So what an individual can do is offer to donate, say, 10% of his company to a charity. Let's say that the company did really well last year so that guy can easily find an accountant to say that 10% is worth $10M. So the guy has a $10M tax deduction he can use as he sees fit (subject to AMT and other shit, but you get the point). The guy also knows that last year's performance was a blip and if he repeated that 10% donation this year, he'd only get a valuation of $5M. In effect he's got an extra $5M from the valuation. When I was younger, I was on the young alumni board for the university I went to for undergrad and we used to see this all the time. Someone would donate property/illiquid securities/art/etc with an 'assessed' value of (say) $10M, but when the school went to sell it, they'd only realize (say) $3M in cash. But the guy would still get to keep the $10M tax deduction. To a guy like that, a $10M tax deduction could be worth $4m to $5M easily. I'm sure you're wondering, and yes this is in that 'gray zone' that's just millimeters from being tax fraud. However, the IRS rarely pursues these cases 1) because they are really hard to win, 2) the school doesn't really care b/c they still just got a $3M donation, and 3) the school isn't going to 'help' the IRS (beyond bare minimum compliance) b/c the school would have to give up the $3M.'

zodiac 8y ago
Ah, so this is the case when the company is "valued" at $100m but you can't actually sell any stock at that price, right?