Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Musk’s $5.7B Mystery Gift Went to His Own Charity

bloomberg.com

Post reply on HN
Print view View original

301–310 of 343 posts

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#301

Post by pwinnski »

s1artibartfast wrote: post #279
pwinnski wrote: post #272

Earlier quoted context omitted.

Because the charity can expense things you can use without anyone paying taxes on anything. Charity holds a conference at a resort, that's an operating expense. Present are the officers of the company, which is you and your friends and family. All expenses for the charity, paid from the million, and therefore untaxed.

Still seems like a pretty crappy deal to me and negative expected value. More so if you have your own Corporation that can do all those things. I feel like there is a n Physical limit on the number of tax deductible meals and vacations someone and their family can consume

Your own corporation pays corporate taxes that a non-profit does not, and you cannot transfer personal wealth to a corporation without paying taxes on it as you can with a non-profit.

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#302

Post by sokoloff »

HDThoreaun wrote: post #294
sokoloff wrote: post #117

Earlier quoted context omitted.

The cost basis step-up is not insane, IMO. It's partly practical ("how am I going to find out the date purchase and basis of some shares my grandfather bought in an account that was doing dividend reinvesting?!"), and partly to avoid unexpected outcomes ("grandpa gave the house to Alice and the rest of his estate to Bob"; if capital gains were due on the house, would Alice have to pay them or would Bob?). IMO, the ba…

Couldn't disagree more. Buy, borrow, die, is an insidious loophole that is costing the government billions in lost taxes. > grandpa gave the house to Alice and the rest of his estate to Bob"; if capital gains were due on the house, would Alice have to pay them or would Bob? Capital gains taxes are paid when the asset is sold. When the house is sold the owner should have to pay the full capital gain tax, not the amoun…

An hour before he died, Grandpa George could have sold the house and excluded $500K of capital gains (if his spouse died within the prior two years) or $250K otherwise. He could then pass his estate tax-free to heirs (assuming it was a typical "normal person sized" estate). In that case, the value of the house is now in [stepped-up/not taxed] dollar bills.

Why should the fact that he transferred a minute after he died rather than 60 minutes before make a difference to the taxes owed? Sell it for a fair market price to Alice a minute before you die, then transfer the proceeds of the sale to her as part of your estate. Same effect.

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#303

Post by HDThoreaun »

sokoloff wrote: post #302
HDThoreaun wrote: post #294

Earlier quoted context omitted.

Couldn't disagree more. Buy, borrow, die, is an insidious loophole that is costing the government billions in lost taxes. > grandpa gave the house to Alice and the rest of his estate to Bob"; if capital gains were due on the house, would Alice have to pay them or would Bob? Capital gains taxes are paid when the asset is sold. When the house is sold the owner should have to pay the full capital gain tax, not the amoun…

An hour before he died, Grandpa George could have sold the house and excluded $500K of capital gains (if his spouse died within the prior two years) or $250K otherwise. He could then pass his estate tax-free to heirs (assuming it was a typical "normal person sized" estate). In that case, the value of the house is now in [stepped-up/not taxed] dollar bills. Why should the fact that he transferred a minute after he die…

I don't care about excluding up to $500k. I care that billionaires entire fortune is excluded when they die. We can go round and round about which loopholes make sense. But in the end I don't think there is any reason that billions of dollars of equities should be excluded from paying capital gains taxes just because their owner died. You shouldn't get a tax advantage for dying. Selling everything you own the day after you die should have the same tax implications as selling everything the day before you die.

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#304

Post by DwnVoteHoneyPot »

tdeck wrote: post #224
DwnVoteHoneyPot wrote: post #210

Earlier quoted context omitted.

It's not unreasonable for a family member to want to spend their days working at a charity, using the family funds and time for good. But then it gets spun as nepotism by haters.

Because it is nepotism. They're drawing a salary, not volunteering to "do good". Why were they qualified for that position? It's obviously because they're a family member.

So you want to ban family businesses? Grandma needs to interview for her job making perogies? The daughter needs to do a coding test to prove that she's qualified run the cashier over other candidates?

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#305

Post by sokoloff »

HDThoreaun wrote: post #303
sokoloff wrote: post #302

Earlier quoted context omitted.

An hour before he died, Grandpa George could have sold the house and excluded $500K of capital gains (if his spouse died within the prior two years) or $250K otherwise. He could then pass his estate tax-free to heirs (assuming it was a typical "normal person sized" estate). In that case, the value of the house is now in [stepped-up/not taxed] dollar bills. Why should the fact that he transferred a minute after he die…

I don't care about excluding up to $500k. I care that billionaires entire fortune is excluded when they die. We can go round and round about which loopholes make sense. But in the end I don't think there is any reason that billions of dollars of equities should be excluded from paying capital gains taxes just because their owner died. You shouldn't get a tax advantage for dying. Selling everything you own the day aft…

I care more about what happens to the estates and heirs of the 3M less than millionaire regular Americans that die every year and what happens to their estates than I do about the ~15 billionaires that die each year.

> Selling everything you own the day after you die should have the same tax implications as selling everything the day before you die.

I agree with that . That's exactly why the vast majority of family homes would be passed along tax-free, with stepped-up basis (as was my point above: "the basis should be as of the date of death, with any taxes due owed from the estate, not the heirs" [which I thought earlier you "Couldn't disagree more"]).

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#306

Post by micromacrofoot »

fareesh wrote: post #212

Hillary Clinton - Clinton Foundation = Good Barack Obama - Obama Foundation = Good Bill Gates - Bill & Melinda Gates Foundation = Good Mark Zuckerberg - Chan Zuckerberg Foundation = Good Warren Buffet - Buffet Foundation = Good ELON MUSK SATAN'S ACOLYTE WHO WROUGHT UPON THE WORLD THE REMOVAL OF HEAVENLY DAUGHTER VIJAYA GADDE NOBLE DEFENDER AGAINST THE LIES OF THE DRUMPF = Mystery foundation = EVIL The overall zeitges…

They're all bad

Trump's foundation was actually misusing funds though, they lost the trial.

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#307

Post by mrep »

trs8080 wrote: post #214
mrep wrote: post #180

Earlier quoted context omitted.

> then pay yourself a ridiculous salary for running the organization with the rest of the money So instead of paying 20% cap gains, they choose to pay 37% federal income taxes + state?

Yes, because pocketing money directly from fundraising activities for a 501c3 is illegal, regardless of if you pay capital gains on it.

I'm not sure what you are saying.

Donating capitol that has gained value to a non-profit to then use to pay yourself a salary with causes you to pay more taxes than if you had just realized the gains and skipped the non-profit as cap gains taxes are lower than income taxes for the top bracket.

OP "legal scam" causes them to pay more taxes.

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#308

Post by micromacrofoot »

93po wrote: post #267
micromacrofoot wrote: post #81

Earlier quoted context omitted.

Most people who are angry about one are angry about the other too, everyone knows it's a tax avoidance scheme

This makes no sense. Tell us how Musk comes out ahead financially in this situation.

He gets to donate money to "charity" and still controls who benefits from it. The donation reduces their tax burden and they still benefit from the power of wielding said money, with some additional strings.

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#309

Post by jcheng »

bane wrote: post #250
jcheng wrote: post #206

Earlier quoted context omitted.

It may happen, but it’s not legal, it’s called inurement and the IRS can hammer you or strip the organization of its tax exempt status if it finds out. This applies not only to ridiculous salaries but also use of the charity’s assets for private benefit. https://www.501c3.org/dangers-of-nonprofit-inurement-and-pri... For instance: https://apnews.com/article/campaigns-donald-trump-us-news-ap...

What makes a charity "fake"? If I start a charity, make myself chairperson and CEO or President or whatever, I "deserve" a reasonable salary. If my fundraising events bring in my salary + event expenses + what I can use for charitable activities, what does it matter if what actually goes out the door is 5% of all donations? I have to pay staff salaries and I have to pay event hosting fees. In other words, for most of…

Doesn't the CEO (i.e. yourself) pay income tax on the $200K? What was the point of this again?

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#310

Post by mrep »

yamtaddle wrote: post #142
ceejayoz wrote: post #23

Earlier quoted context omitted.

Donating $5.7B to save an absolute max (37% tax bracket; he's probably much lower with most income via capital gains) of about $2.1B in taxes doesn't make financial sense, unless you've got a plan to siphon off at least $3.6B tax-free out of the charity. Why do people think a $1B donation saves $1B in tax?

> Why do people think a $1B donation saves $1B in tax? A distressingly large slice of eligible voters don't even understand how marginal tax rates work. Which is, like, the absolute minimum to have any clue whatsoever how US income taxes are applied, what tax bills will actually do if they become law, and so on. I'd be surprised if understanding of how deductions work is any more widespread. [EDIT] Not a great source…

> Can't find data on how many US adults understand how deductions work, but I doubt it's better.

Almost certainly much much lower seeing as how a ton of people here don't understand how deductions work.

Post reply on HN