Submitted by Nergaal t3_1135f9j in technology
Badtrainwreck t1_j8q3ftd wrote
Reply to comment by Notorious_Junk in Elon Musk donates almost $2bn of Tesla shares to charity by Nergaal
Based on how the legal system works (and how billionaires like Bill Gates and others use them) he likely setup a 501c3 that he fully controls, donated money to himself to avoid taxes, and since the charity is in control of Tesla stocks, it can use those stocks to take loans in which it pays the lowest interest rates, then that charity will create programs that appear to help underprivileged communities, but in reality the focus will be in driving up the value of the Tesla stock within its possession. This can of course have benefits for others but not even close to the valuation of the stock it holds.
voyageur77 t1_j8sjer1 wrote
This is actually completely illegal, is there a link with info about anyone ever doing this? All 501(c)(3)s are a public record on the IRS website so this should be really easy to prove. He may have donated shares to his own foundation but the rest of this isn't real.
Badtrainwreck t1_j8srvgm wrote
This is the info just off the website of the foundation, you can follow the trail of you want, but it’s all just linked to nonprofits being used to increase stock value, and while packaged to look like they are just helping small businesses grow and make more money from selling to a particular corporation.
voyageur77 t1_j8sseyo wrote
This doesn't say anything at all about anyone donating stock or a non-profit taking out loans against donated stock.
Badtrainwreck t1_j8szbao wrote
That’s specifically why I said you can follow the trail if you want, there are several articles you can find about billionaires and how they use charities.
https://www.nytimes.com/2022/09/14/climate/patagonia-climate-philanthropy-chouinard.html
This is an example of a billionaire who honestly has done something as close to good as a billionaire can, but the truth is in the way he donated his business, he still has ultimate control over it because he controls the charity, so if it is used for good (as he has used it for good in the past, there’s no reason to question him in my opinion) is up to him, but the reality is if he wanted then he can just do what he wants.
You’ll see this also in how billionaires setup trusts and nonprofits for their children to control which contain within them all their finances and businesses. It’s just piecing together the 1000 loopholes in the system.
I can’t send you one article because there is no one article that says all this that I know of, but just google how billionaires used charity’s and you’ll find many reputable sources who speak about this.
Taking out loans for example is just how billionaires operate, purchasing a yacht by using stock as collateral and then using the yacht as an asset for future loans in which gives them access to an eternal loan of almost no interest. When they give stock to a charity, the charity can act in the same way, because of loopholes within the system
Edit: if you don’t think this is possible, and you’re just trying to argue with me because you disagree then please feel free to not respond any further, but if you’re genuinely interested and willing to take some time to look into shit also then I could find more things later on after work, but I don’t want to waste my time on someone who is just going to say “naw” no matter what.
[deleted] t1_j8t2raf wrote
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voyageur77 t1_j8t4su9 wrote
It is quite simply extremely illegal for a charity to buy a yacht for the founder to use. These loopholes don't exist. They're reddit "rich people bad" conspiracy theories, like the grocery store getting a tax deduction when you round up the change for charity.
Badtrainwreck t1_j8towtc wrote
It’s not rich people bad, it’s not about buying a yacht for wealthy person to use, you’re using my thrown out example to explain to you the basics of something as literal.
People and organizations with a lot of stocks, use that stocks to buy an asset, they then take loans against that asset. Nothing stops a nonprofit from buying property, nothing says they can only own specific assets.
investing in property is a normal way to protect wealth. It’s not rich people bad, it’s this is what’s normal. You might not like it but the difference between a nonprofit and a profit driven organization is that a for profit institutions goals is to increase profit for its shareholders. A nonprofit can do the exact same but instead be used to drive wages for the workers.
I’ve remodeled a nursing home which no longer existed but their paperwork was still there, that’s how I learned the not for profit was being used to fund the director because the director purchased the property the nursing home operated on, the nursing home took care of all maintenance and costs, and the director just took a large amount in rent. Very legal, very normal, very much a for profit hidden as a nonprofit
voyageur77 t1_j8tuh1e wrote
How does that avoid any taxes? The director has to pay taxes on the rent received from the non-profit, while the non-profit has no use for deducting rent expenses.
Non profits are not allowed to own whatever investments they want and do whatever they want with the money, look up Unrelated Business Taxable Income for example. A charity that is controlled by some rich guy will only qualify as a private foundation instead of a public charity. It is then not allowed to own a large amount of stock, and not allowed to pay high salaries or rent to the family members. It must operate exclusively for charitable purposes, it cannot act to favor the family's business. All the income and spending goes on Form 990 for the IRS to see.
The IRS isn't dumb. The scams you're describing are tax fraud and they will get you audited. There are hundreds of pages of IRS rules against this kind of stuff.
turtlejelly1 t1_j8tyll1 wrote
The IRS is not dumb but they have to work within the legal system. The system has flaws. Wealth can navigate flaws and unfortunately take advantage of it while the IRS watches.
Badtrainwreck t1_j8u4fo2 wrote
Some of what I’m saying is the expression of parts of the system, not that every part of it “avoids taxes” we are talking about 501c3s as a whole. The avoiding taxes is from a part of the discussion where instead of my dying and leaving you a company which is at risk of the estate tax, I can create an entity which I give you control over and it avoids the tax, because it’s not longer inheritance it’s just transferring control of the create entity.
The IRS says you can be reasonably compensated, but again this isn’t the point or the issue, because what billionaire is “reasonably compensated” because Jeff Bezos is paid 88,840 but is that the limits of his worth? If salary is the end all be all then I’m absolutely wrong, but if you’re a major shareholder of a company, and you donate money as a write off to a company that then spends that money on increasing the value of your asset, raising the value of the charitable work they do on the books and they transfer that into stronger lobbying ties then you’re still using a nonprofit in a legal way that is still in your own interest.
That’s the problem, not billionaire bad, not system broken I now cry, but nonprofits have almost no real oversight and there are plenty which operate as if they are for profit organizations.
This is just about the fact that there is a real system in which nonprofits can be useful for enriching yourself
turtlejelly1 t1_j8ty7eu wrote
I don’t think you understand the legal system… They are utilizing loop holes that are in the system which appear illegal and the system knows there is a loop hole that is being utilized. They won’t do anything about it because it helps the .01%.
voyageur77 t1_j8u0lul wrote
As a lawyer who actually works on these issues, I think I have a pretty good idea of how the system works.
turtlejelly1 t1_j8u1ktq wrote
Oh, I’ll find my own way out! I hope you take advantage of your skills and loopholes that the .01% know since you studied and worked hard to attain! And then you can teach us!
Pussy_handz t1_j8uwj61 wrote
LuL My reddit and personal googling says this bullshit...Yeah well Im a fucking lawyer that specializes in it. Actually perfect.
Badtrainwreck t1_j8ukdfe wrote
If you’re a lawyer, then you know the ways in which people abuse nonprofits, but you haven’t stated anything in how they abuse them, you’ve just essentially said “rich people not bad, they aren’t doing anything illegal.” Then you’ve asked me to explain to you all the basics, which are simple things which you should already know, especially you shouldn’t have been confused by anything since your expertise would inform you even if I’m piss poor at explaining it.
It’s more likely you’re not a lawyer or you’re a lawyer who helps people take advantage of the loopholes that exist and on your spare time you defend what you do on the internet.
voyageur77 t1_j8un919 wrote
You aren't explaining the "basics", all of your info is completely wrong. That's why I stopped responding to you, but I guess I can do one more.
You say that putting a business into an entity avoids estate tax: wrong, the value of the entity is still subject to estate tax. You say transferring "control" of the entity instead of giving the business at death doesn't count as inheritance and avoids tax: wrong, you would just owe gift tax instead of estate tax at the exact same tax rate, AND lose the step-up in tax basis from inheritance. (By the way, inheritance tax is not the same thing as estate tax, you seem to be mixing them up). You think Musk gets to write off donating $2 billion of stock to his foundation: wrong, the deduction for giving stock to your foundation is limited to 30% of AGI, and his AGI is not that much. You say the foundation can spend its money to increase the value of Tesla: wrong, it is illegal for a foundation to promote a for-profit business instead of charitable purposes. You say the foundation then spends its money on lobbying: wrong, it is illegal for a foundation to do a significant amount of lobbying, and any lobbying expenses have such a high penalty that basically nobody does it.
These are all actual IRS rules that exist. You have no sources for what you're saying because it doesn't exist in the real world. Where did you hear this stuff anyway, it has to be either Reddit comments or TikTok?
Badtrainwreck t1_j8upqrl wrote
If you create the nonprofit, and within its bylaws you’re an employee who just runs the nonprofit, then your child can take control just by being the next employee in line to takeover. It’s not a gift it’s a job.
Let’s not overcomplicate this, whomever is in control of the board is in control. How you gain control does not need to be a gift or an inheritance.
You said it’s illegal to promote a for profit business as a nonprofit, but what does promote mean? It’s about not letting your left hand know what your right hand is doing. Coca-Cola works with the Bill and Melinda Gates foundation to increase the number of farmers producing the ingredients they need for their products. The charity is just doing charitable work and the Coca-Cola company is just donating money to a charity.
You say a nonprofit can’t lobby, not all lobbying is lobby the way we see it, it can simply be the bill and Melinda gates foundation holding a fundraiser to help with increasing access to vaccines and a few politicians attend to increase their healthcare credentials and rub shoulders with rich and powerful donors.
It’s not about everything being illegal, but it’s about creating environments in which the parties involved benefit.
voyageur77 t1_j8v1aae wrote
A private foundation cannot own more than 20% of a company, so no, you can't pass control over the board of a business to your kids this way. And there is no tax advantage to Coca Cola paying farmers through a charity. They could pay directly and deduct it as a business expense anyway. What tax do you think this is cheating on?
Badtrainwreck t1_j8v21cb wrote
Cheating on taxes? Again remember you and me have spoken about several ways in which nonprofits are used to increase someone’s financial position, not all ways involve taxes. One way was using a nonprofit to create rental income on property the nonprofit utilizes. That’s not avoiding taxes that’s benefiting financially in a legal method by utilizing a nonprofit in a way to enrich oneself.
Because Coca-Cola wants to do business with bill gates, he is one of the primary shareholders of Coca-Cola, plus Coca-Cola wants to be able to pay farmers less money for their products but there aren’t enough farmers producing what they want, so they are increasing the number of farmers to increase competitiveness to drive cocacolas costs further into the ground
voyageur77 t1_j8v2mta wrote
Bill Gates does not own any Coca Cola stock. Zero. Google says their foundation sold all of it 8 years ago. Your information is comically bad.
Badtrainwreck t1_j8v42eg wrote
I’m an idiot, I can’t believe I wasn’t able to do a simple google search, egg on my face. Had I googled it I’d have seen that they disinvested in 2014, and I’d have also seen they did the charity work to increase the number of farmers in 2010! 4 years before selling and as we all know that time travel isn’t possible, but idk I’m not a lawyer
Badtrainwreck t1_j8uz3da wrote
I just want to add you’ve seen the link of the Bill Gates Foundation offering grants to help farmers produce ingredients Coca-Cola needs, but it’s also important to know that Bill Gates stock ownership is public and he owns 1.599 billion in Coca-Cola stocks, so if you’re a lawyer and all of this sounds illegal, then we should have someone investigate. The government clearly isn’t
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