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

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

#241

Post by s1artibartfast »

Retric wrote: post #170
dabernathy89 wrote: post #167

Earlier quoted context omitted.

I don't think it's clear how this contradicts the comment you're replying to.

“However, crucially, when the money leaves the foundation it must go to an approved charity.” They can spend money on expenses and those expenses can benefit you. Having family members work for and be generously paid by such an orientation is a common example. Anytime you control a cash flow you can benefit from that cash flow.

Any salary paid by the organization would be taxable income for the recipient, closing the loop.

Also, you dont need the pretext of non-profit to do this. There are plenty of ways to simply pay family a pre-tax salary and deduct the cost against your income.

You can do this with any corporation and dont need to do it through a charity.

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

#242

Post by yunohn »

boringg wrote: post #179
yunohn wrote: post #155

Earlier quoted context omitted.

You’re standing up for the equality of billionaires? Sure, they’re a minority by definition, but I think we can all agree they’re not a disadvantaged class.

Standing up for billionaire? Nope. Pointing out that the complaint is poorly structured in how the world works with a goal is to help strengthen arguments and promote better conversation on here.

You’re saying that drawing a line at billionaire wealth doesn’t make sense. I don’t understand that logic, we draw lines for everything - why is this is such a messy limit according to you?

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

#243

Post by s1artibartfast »

DwnVoteHoneyPot wrote: post #210
Retric wrote: post #170

Earlier quoted context omitted.

“However, crucially, when the money leaves the foundation it must go to an approved charity.” They can spend money on expenses and those expenses can benefit you. Having family members work for and be generously paid by such an orientation is a common example. Anytime you control a cash flow you can benefit from that cash flow.

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.

IT is nepotism, but I think people have the mistaken idea that nepotism is unethical in all situations. It isn't necessarily corrupt or illegal.

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

#244

Post by s1artibartfast »

abruzzi wrote: post #116
s1artibartfast wrote: post #75

Earlier quoted context omitted.

The important distinction is that you cant spend those non-profit funds the same way you could cash in your pocket. It is under your control, but you can't use it to buy a Hawaiian island vacation home.

true, but it is possible to use it in ways that benefit you or your priorities. I'm not saying that is what Musk is doing, but the ability to spend a billion dollars or potentially charitable endeavours can have direct benefits to the giver.

Sure, but there is nothing inherently wrong about that.

If I'm gay and donate to an LGBT rights charity, I would love to see direct benefit.

If I play sports and donate to my nonprofit Club, I also hope to see direct benefits.

Charitable donation by definition is donating to things that Advance your priorities. Those might be a world with less hunger, saving lives, or whatever. Nobody donates to charities that work against their priorities.

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

#245

Post by s1artibartfast »

brookst wrote: post #64
c22 wrote: post #40

Earlier quoted context omitted.

I think he's probably optimizing for both. Don't hate the player, hate the game.

I don’t see how a charity can be simultaneously optimized for benefiting its founder and also benefiting people other than its founder. Different goals, different choices. Unless you’re suggesting that Musk is such an egomaniac that he thinks the best thing a charity can do is help him personally?

If you're rich and gay, you might donate to a charity promoting LGBT equality. That benefits both you and other people.

I don't think there's anything wrong about this at all

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

#246

Post by s1artibartfast »

c22 wrote: post #97
brookst wrote: post #64

Earlier quoted context omitted.

I don’t see how a charity can be simultaneously optimized for benefiting its founder and also benefiting people other than its founder. Different goals, different choices. Unless you’re suggesting that Musk is such an egomaniac that he thinks the best thing a charity can do is help him personally?

It goes like this: I want to lower my tax liability by donating to charity > as long as I'm doing that I want to make sure I'm supporting something I agree with > I'll start my own charity to ensure that's the case. Frankly I'm much more concerned about the billion dollar roth IRAs and 529 plans which seem to have a much lower chance of helping anyone else.

Roth IRAs aren't supposed to benefit anyone else. That's not why they exist

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

#247

Post by Retric »

s1artibartfast wrote: post #241
Retric wrote: post #170

Earlier quoted context omitted.

“However, crucially, when the money leaves the foundation it must go to an approved charity.” They can spend money on expenses and those expenses can benefit you. Having family members work for and be generously paid by such an orientation is a common example. Anytime you control a cash flow you can benefit from that cash flow.

Any salary paid by the organization would be taxable income for the recipient, closing the loop. Also, you dont need the pretext of non-profit to do this. There are plenty of ways to simply pay family a pre-tax salary and deduct the cost against your income. You can do this with any corporation and dont need to do it through a charity.

The point is you can recuperate some money after donating it.

The optimal approach is roughly donating appreciated assets such as stock so you not only get to avoid paying taxes on the sale but also reduce your income taxes elsewhere by the full amount. Aka if a stock is nominally worth 10 million but you would only get 9 million after tax if you sell it you still get to deduct the full 10 million from income taxes. Which beats the obvious idea of using a corporation to directly pay them.

For the full tax implications you need to consider the benefits of avoiding income tax and gift/inheritance tax for the donors as well as the recipient receiving benefits tax free as well as a portion of their salary at much lower tax brackets plus the impact of payroll taxes.

(Not a tax professional and loopholes change over time.)

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

#248

Post by sokoloff »

mindslight wrote: post #240
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…

Stepped up basis came out of the idea that one was already paying estate tax. Now that estate tax has disappeared for many, it seems ridiculous. The IRS has no problem requiring you to maintain paperwork across generations. For example I've got some series EE savings bonds I inherited from my grandmother, where income taxes were partially paid (you can effectively switch just your savings bonds to an "accrual" accoun…

For an unsophisticated Grandpa George, he may have intended a roughly even split based on the notional value of the paid off house being the same as the rest of the estate, while the net result would be different after paying CG.

I guess I’m just not too fussed about the government not getting a lick when someone dies and would rather the family and other heirs receive whatever they’re able at what amounts to a sad time.

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

#249

Post by tootie »

synergy20 wrote: post #234
tootie wrote: post #219

Earlier quoted context omitted.

It's a perfectly valid thing to do and can be done for the right reasons, but for a counterpoint you can look at the Trump Foundation. Trump and his family gave money to the foundation and the foundation bought things from Trump (ie hosting events at Trump properties). There's loads of small foundations like this that exist for self-dealing, nepotism and tax evasion. That's also not really unique to self-funded found…

Agreed, my point is there is nothing unusual, it's a common practice everywhere, so I don't get why Bloomberg needs a big report, not sure if it did for all other big guys in the past, otherwise it seems it has an interest to target Elon. As far as fraud goes, I hope the system will work out when bad things went too far there. We're all innocent with good intention until proven otherwise, Elon should be treated the s…

It was $5.7B. That's an enormous gift and one that was not disclosed at the time it happened last year. The Musk Foundation now has an enormous endowment and a hazy mission.

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

#250

Post by bane »

jcheng wrote: post #206
bane wrote: post #134

Earlier quoted context omitted.

Right, I first learned about this when being forced to watch some of the "Housewives of ..." shows by my wife. I couldn't figure out why all these objectively terrible people all had their own personal charities (many of the episodes revolve around the social group of the show going to each other's charity events). It turns out it's a common, but legal, "scam". Take in funds from fundraisers, give away a little, then…

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 these things the difference between an A-grade charity like the American Red Cross (which puts out something like 90% of its charitable donations to actual charitable activities and the CEO makes over $700k/yr) and a charity with a CEO who makes $200k, but that's 50% of their overall donation income, but still moves their money forward towards their stated goal, the legal difference is imperceptible. The second charity may just be small, or not good at raising funds, or has limited reach, or has a charitable focus nobody cares about, or could just be a way for some socialite to make an extra $200k a year while hosting fundraising "parties" every quarter...it's just not possible to really tell.

Even in this example, the charity looks more legitimate than what the original posting is about, and there are tens of thousands of these.

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