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Transactions like that happen all the time and are not problematic if handled legally. Any of the interested parties could have sued over it, but none have.

adrr 5mo ago
Because they got to participate in the early investment in the for profit entity. > Early Angels (Reid Hoffman, Peter Thiel, and others): Approximately $10 million invested, current value $1.4 billion. That corresponds to a return of around 140x. https://www.trendingtopics.eu/openai-cap-table-leak/ https://www.trendingtopics.eu/openai-cap-table-leak/
atom_arranger 5mo ago
The interested parties would be taxpayers. I think some groups are trying to look into it. The issue is that they did R&D as a charity, donations to which are tax deductible, there may also be other benefits to being a charity during R&D but that’s a big one, then once the thing works, setup a for profit, sell ip at “fair value”, get some investment, then things are ready for business. I read there’s no statute of limitations on a tax issue like this, so I guess it might be hanging over them indefinitely. I’m not a big taxation and government fan, they’d probably just waste the money anyways. It does seem unfair OpenAI gets to use this loophole though, unless all companies can make their R&D investment tax deductible, and get any other benefits of this setup.
- Traster 5mo ago
  The interested parties are the taxpayers, and in this case the legal mechanism for that was the California Attorney General approving OpenAI's restructuring. Here's the MOU: https://oag.ca.gov/system/files/attachments/press-docs/Final%20Executed%20MOU%20Between%20OpenAI%20and%20California%20AG%20re%20Notice%20of%20Conditions%20of%20Non-Objection%20%2810.27.2025%29%20%28Signed%20by%20OpenAI%29%20%28Signed%20by%20CA%20DOJ%29.pdf https://oag.ca.gov/system/files/attachments/press-docs/Final... There is no loophole here.
beambot 5mo ago
Or more specifically: One just did sue, but lost because he waited too long.

adrr 5mo ago

Because they got to participate in the early investment in the for profit entity. > Early Angels (Reid Hoffman, Peter Thiel, and others): Approximately $10 million invested, current value $1.4 billion. That corresponds to a return of around 140x. https://www.trendingtopics.eu/openai-cap-table-leak/ https://www.trendingtopics.eu/openai-cap-table-leak/

atom_arranger 5mo ago

The interested parties would be taxpayers. I think some groups are trying to look into it. The issue is that they did R&D as a charity, donations to which are tax deductible, there may also be other benefits to being a charity during R&D but that’s a big one, then once the thing works, setup a for profit, sell ip at “fair value”, get some investment, then things are ready for business. I read there’s no statute of limitations on a tax issue like this, so I guess it might be hanging over them indefinitely. I’m not a big taxation and government fan, they’d probably just waste the money anyways. It does seem unfair OpenAI gets to use this loophole though, unless all companies can make their R&D investment tax deductible, and get any other benefits of this setup.

Traster 5mo ago
The interested parties are the taxpayers, and in this case the legal mechanism for that was the California Attorney General approving OpenAI's restructuring. Here's the MOU: https://oag.ca.gov/system/files/attachments/press-docs/Final%20Executed%20MOU%20Between%20OpenAI%20and%20California%20AG%20re%20Notice%20of%20Conditions%20of%20Non-Objection%20%2810.27.2025%29%20%28Signed%20by%20OpenAI%29%20%28Signed%20by%20CA%20DOJ%29.pdf https://oag.ca.gov/system/files/attachments/press-docs/Final... There is no loophole here.

beambot 5mo ago

Or more specifically: One just did sue, but lost because he waited too long.