Following up on my previous posts:
New York Times: Why It’s Too Soon to Sour on the Zuckerberg Charity Plan, by Josh Barro:
Mr. Zuckerberg “has moved money from one of his pockets to another,” as Michael Graetz, a tax professor at Columbia Law School, put it. If they’re going to get the tax benefits associated with charitable giving, they’ll have to give their wealth to a real charity sooner or later. As for now, the transaction is neither an irrevocable gift to charity nor a tax dodge; it’s more as if you moved your money to Chase from Bank of America.
The bigger issue is the promise: to use nearly all his wealth “to further the mission of advancing human potential and promoting equality.” On one hand, this is a big deal: The two have a lot of money, and Mr. Zuckerberg is promising to use it for the common good.
They even have a good argument for the L.L.C. structure. Not all good activities fit within the tax code’s definition of charity. A for-profit company can develop products that help people live better lives; a lobbying initiative can seek public policies that make people happier and more equal. ...
In the short run, some, including Jesse Eisinger of ProPublica and The New York Times, have identified one policy area that merits a look: the aforementioned tax break for charitable donations of appreciated stock, which can generate much larger tax benefits than donations of equal amounts of cash.
Unlike some donors, the couple won’t be able to take full advantage of this provision. The key to the bonus for stock donations is the double benefit: exclusion of the accrued capital gain from tax, combined with the deduction of the stock’s value against other income. But if the couple really intend to give away nearly all their wealth in the long run, they will be limited in how much other income they have to deduct these donations against.
As Matt Levine of Bloomberg put it, “Giving away 99 percent of your money to shield yourself from income taxes on the other 1 percent is economically nonsensical.”
The I.R.S. also will only let you take a tax deduction for gifts of appreciated stock equal to 30 percent of your adjusted gross income in any year. That’s a limit that’s unlikely to interfere too much with the tax-planning strategies of ordinary rich, very-rich or very-very-rich people, but that would probably prevent Mr. Zuckerberg and Ms. Chan from taking advantage of a full $44 billion in tax deductions.