Jesse Eisinger writes in the NYT that if you heard that Mark Zuckerberg donated $45 billion to charity, you are wrong. Here's what really happened: Zuckerberg did not set up a charitable foundation, which has nonprofit status. Instead Zuckerberg created an investment vehicle called a limited liability company (LLC) that can invest in for-profit companies, make political donations, and lobby for changes in the law. What's more an LLC can donate appreciated shares to charity, which will generate a deduction at fair market value of the stock without triggering any tax. "He remains completely free to do as he wishes with his money," writes Eisinger. "That's what America is all about. But as a society, we don't generally call these types of activities "charity.""
A charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year. The new Zuckerberg LLC won't be subject to those rules and won't have any transparency requirements. According to Eisinger what this means is that Zuckerberg has amassed one of the greatest fortunes in the world — and is likely never to pay any taxes on it. "Instead of lavishing praise on Mr. Zuckerberg for having issued a news release with a promise, this should be an occasion to mull what kind of society we want to live in," concludes Eisinger. "The point is that we are turning into a society of oligarchs. And I am not as excited as some to welcome the new Silicon Valley overlords."
Previously: Mark Zuckerberg to Donate $45 Billion Facebook Fortune to Charity
(Score: 5, Informative) by takyon on Friday December 04 2015, @02:47PM
rebuttal from the zuck [marketwatch.com]
FB post [facebook.com]
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(Score: 2, Insightful) by Anonymous Coward on Friday December 04 2015, @02:51PM
Or translated and shortened: "don't pay attention to the criticisms on my actions, here are some shiny bobbles instead... look shiny!"
(Score: 2) by Gaaark on Saturday December 05 2015, @01:30AM
Oooh-hoo-hoo! More! More shinies!!!! Weeee!
--- Please remind me if I haven't been civil to you: I'm channeling MDC. ---Gaaark 2.0 ---
(Score: 0) by Anonymous Coward on Friday December 04 2015, @03:01PM
Oblig: they'll make investments in nonprofit institutions that don't zuck.
It sounds like the fact check goes like this:
- Zuck's Charity isn't a charity - it's really an investment vehicle for himself and his wife true
- Zuck is using this as a gigantic tax shelter false
(Score: 2, Interesting) by Anonymous Coward on Friday December 04 2015, @03:45PM
- Zuck is using this as a gigantic tax shelter for his children : true
This depends on when they were gifted the shares in the the LLC now doesnt it?
You get 100billion shares in a company worth 1 cent. How much in taxes do you owe? Let it ride for 1-2 years. You probably do not even report it. Or maybe you do to make it 'legal'.
Suddenly you have a 'angel' investor. They demand 1 share for themselves but a capex investment of 54 billion dollars. Which has a yield of say 1 dollar a year. Then when you die you only have 1 share in a company worth billions and the remaining 'investors' have the majority of the shares. Meaning the taxes are on a few million dollars. With one *really* crappy investment.
I saw this a few days ago. It looked nothing more than a tax dodge (for his children). It is not the first time he has used charitable donations to do so.
Take for example the Vanderbilts. The 'rumor' in my area is they donated the large Biltmore estate to the city of Asheville. Decidedly not true. They turned a money sink into a 'charitable' business. That by the back of my envelope math makes 200 million a year. Even the narrative of their business is how altruistic they are to let you walk around there at 60 bucks a head. Make sure you swing by the gift shop to buy a 200 dollar replica chess set and a 15 dollar bottle of wine. https://en.wikipedia.org/wiki/The_Biltmore_Company [wikipedia.org] Amazing place to see though.
(Score: 0, Disagree) by Anonymous Coward on Friday December 04 2015, @04:36PM
Put down the crack pipe and read the story.
(Score: 2) by frojack on Friday December 04 2015, @07:34PM
You pay capital gains on any appreciating investment. Yes, you have to report it.
They could set up a 401k for their kids to assure they will have a comfortable retirement, but when they start drawing on that they will pay taxes.
Everyone things this is a Tax Dodge, but a LLC really isn't (by itself) a tax dodge. In most cases it is what the IRS calls a "Disregarded Entity", because all taxes flow through to the LLC owners.
Yes, this structure lets him do more of what HE wants with the money.
But NO, he isn't going to dodge much in the way of taxes that he couldn't have dodged by just holding those assets in his own name. I'm sure there are some taxes avoided, (He can afford the best tax lawyers in the world), but its not the windfall that TFS/TFA leads you to believe.
Charity gifts are a write off in either case.
No, you are mistaken. I've always had this sig.
(Score: 0) by Anonymous Coward on Saturday December 05 2015, @02:57AM
Its called being poor on paper. The way an accountant explained it to me.
You look like you are making 18k a year. But your company makes 200k a year. But all the taxes are held inside the LLC. You think they cant setup a double Irish with a twist? Your company still has to pay taxes on *new* money. But existing money is a capex investment. It is the same way i can invest money into facebook itself. I buy shares. I am not taxed on that money until I sell the shares. The money invested can basically be disappeared. He even said how he is going to do it. He is going to use the LLC to invest it into other companies. If it worked your way. If I started a company and it was between me and 5 other people. They all invest 1 dollar. I invest 1 million dollars. Now with your way they all owe taxes on that one million. The way it works in the real world is typically I get more shares and they get less. The business gets the one million to invest as it sees fit.
Disregarded Entity would have one owner. Adding more owners is easy. They are all of your children, your family (aunts uncles, etc), your wife, etc...
You seem to think the accountants that achieved the effective 0 tax rate for facebook cant do the same thing for the LLC?
(Score: 2) by takyon on Friday December 04 2015, @03:45PM
At $45 billion with a goal of eliminating disease, any "charity", "investment", or "charitable investment" could benefit them.
We are talking about a 30 and 31 year old. There is a good chance diseases like Alzheimer's will be eliminated within the next 30 years, in small part due to investment vehicles like this.
Of course, since no money has been given out to anyone yet, we only have the promises to go on.
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(Score: 0) by Anonymous Coward on Friday December 04 2015, @04:05PM
> At $45 billion with a goal of eliminating disease, any "charity", "investment", or "charitable investment" could benefit them.
That's not really what people mean they talk about it being self-serving. Its more about the "doing good while doing well" mindset - that zuckerberg will personally benefit from the charity's operations in ways that the general public will not.
(Score: 3, Insightful) by takyon on Friday December 04 2015, @04:59PM
Hmm, well I'm not tooooo concerned about some of the $45 billion rubbing off back into Zuck's coffers.
For all the criticism [techrights.org] the Gates Foundation gets around here, the Zuck LLC may be even more transparently self-serving for the founder. Since one of the goals seems to be increasing Internet access... which could mean more profits for Facebook. And since the shares will be given to the LLC over a long period of time, they get more money if the LLC's activities increases the value of Facebook..
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 0) by Anonymous Coward on Friday December 04 2015, @05:24PM
> Hmm, well I'm not tooooo concerned about some of the $45 billion rubbing off back into Zuck's coffers.
It's his right. Just don't call it charity.
> Since one of the goals seems to be increasing Internet access...
You just know that's going to be all about increasing access to the facebook walled garden, aka facebook-zero. [wikipedia.org]
(Score: 2) by pe1rxq on Friday December 04 2015, @06:34PM
For me the big problem is that $45 billion ended up being invested in an over-hyped advertising company in the first place.
(Score: 2) by takyon on Friday December 04 2015, @06:51PM
It's the way of God's America. Where's your billion dollars?
🌠✝☠☢☣💰💰💰💃💉💊💋💎👌🗽💤
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(Score: -1, Redundant) by Anonymous Coward on Friday December 04 2015, @03:05PM
Do you really expect any soylentil to NOT have facebook.com and www.facebook.com in their hosts file happily pointing back to 127.0.0.1 (ain't no place like home)?
(Score: 2) by takyon on Friday December 04 2015, @03:11PM
That's why you got 2 links and the important bits in a blockquote.
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(Score: 0) by Anonymous Coward on Friday December 04 2015, @03:25PM
And I thank you for it... Please continue your good work
(Score: 1, Funny) by Anonymous Coward on Friday December 04 2015, @04:13PM
127.6.6.6 — home of the evil. ;-)
(Score: 3, Interesting) by kadal on Friday December 04 2015, @03:21PM
Vox had a similar explanation (http://www.vox.com/2015/12/2/9836884/zuckerberg-llc)
(Score: 2) by Runaway1956 on Friday December 04 2015, @03:33PM
I thought you were talking about THIS Vox! http://voxday.blogspot.com/ [blogspot.com]
(Score: 0) by Anonymous Coward on Friday December 04 2015, @03:45PM
And that perfectly illustrates how distorted your perception of reality is. That whackadoodle is completely unknown to anyone outside his circle-jerk.
(Score: 2) by Runaway1956 on Friday December 04 2015, @04:04PM
And - how would YOU know? Are you the jerk in his circle?
(Score: 0) by Anonymous Coward on Friday December 04 2015, @04:36PM
> And - how would YOU know? Are you the jerk in his circle?
Because your constant jerking off here has splattered on all of us at one point or another.
(Score: 2) by zugedneb on Friday December 04 2015, @04:49PM
and what have you contributed with?
old saying: "a troll is a window into the soul of humanity" + also: https://en.wikipedia.org/wiki/Operation_Ajax
(Score: 1, Touché) by Anonymous Coward on Friday December 04 2015, @05:20PM
Surely you've noticed that username Anonymous Coward is the most prolific poster on the site.
(Score: 0) by Anonymous Coward on Saturday December 05 2015, @11:17AM
Double-speak for "lobbying" and influence peddling.