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Zuckerberg Answers Critics of His Move To Give Away His Facebook Stock (facebook.com)
An anonymous reader writes: Mark Zuckerberg's announcement that he and his wife are giving away $45 billion worth of Facebook stock garnered a lot of praise and a fair bit of criticism. The Facebook CEO answered some of the apprehension in a post that reads in part: "By using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively. Just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC."
From this Dec 3, NY Times article How Mark Zuckerberg’s Altruism Helps Himself:
(Why an L.L.C.?)
An L.L.C. can invest in for-profit companies (perhaps these will be characterized as societally responsible companies, but lots of companies claim the mantle of societal responsibility). An L.L.C. can make political donations. It can lobby for changes in the law.
(Why not a charitable foundation?)
... a charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year. The new Zuckerberg L.L.C. won’t be subject to those rules and won’t have any transparency requirements.
(Tax implications)
... if the L.L.C. sold stock, Mr. Zuckerberg would pay a hefty capital gains tax, particularly if Facebook stock kept climbing. If the L.L.C. donated to a charity, he would get a deduction just like anyone else. That’s a nice little bonus. But the L.L.C. probably won’t do that because it can do better. The savvier move, Professor Fleischer explained, would be to have the L.L.C. donate the appreciated shares to charity, which would generate a deduction at fair market value of the stock without triggering any tax.
All legal. Don't hate the player, hate the game... (or so I'm told)
It must have been something you assimilated. . . .
its his money its his right to do what he wants with it.
if he wanted to get all his money in a pile and burn it, that would be his right. I dont get why people care what others do with their own money
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. 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. We don't generally call these types of activities 'charity.'
Contrary to what Zuckerberg claims, the creation of his LLC means he will probably pay no taxes on his $45 Billion.
He can do what he wants. No argument there. The problem is, he's being dishonest about what he's doing and why he's doing it.
The LLC categorization permits the Zuckerberg Foundation to lobby as much as they want for legislation change, unlike a regular foundation (501c3). In light of Zuckerberg's FWD.US political action committee spending a fortune lying about the "need" for H1B labor, I don't trust this at all. Look, Zuckerberg STOLE the idea for FB; then he LIED to his customers about maintaining privacy; Now his PAC lies about immigration policy. I don't trust Zuckerberg for a SECOND. "Unfriend" this manipulator!!!
ethics != legality
its legal to be a total asshole. its not ethical.