Can the deduction be carried over or only in the current year?
Because saving $100-200k and reducing your tax liability by $100-200k are two different things.
[doublepost=1566887624][/doublepost]Question is - why not donate 80% of your wealth today while the stock is up? (Assuming he plans to donate 80%).
Apple could very easily tank to sub $10 per share and now it doesn’t help anybody.
Perhaps I oversimplified, I refer to the typical case where the taxpayer making a million dollar donation would save maybe 100-200k by reducing their tax liability by that amount.
Specifically, the charitable contribution is a tax deduction, not a tax credit. You must have sufficient AGI from which to offset the contribution amount. Since in general the deduction for charitable contributions is limited to 60% of AGI (the rules are somewhat involved; depends on income level, the type of organization you donate to and the nature of the asset(s) donated, and possibly other factors) in order to have the benefit of the entire $1 million contribution, the taxpayer would need an AGI of approx $1.7 million, minimum. In that case, the taxpayer would only be taxed on 700k of income, not on the pre-contribution AGI of $1.7 million. The actual amount saved would depend on the marginal tax rate of that last million dollars.
The deduction does not have to be taken in the current year. Should the taxpayer be unable to take full advantage of a tax deduction in the contribution year, it can be carried forward for up to five years. Note: I am not your tax accountant and this is not tax advice. But maybe this helps further your understanding.
re: why not sell and donate the proceeds now? Well, Cook has said he’s going to donate virtually his entire fortune before he dies; it seems reasonable for him to decide how that might be scheduled throughout his remaining lifetime. He’s already given over $100 million to charity out of, who knows, maybe a $700 million fortune.
Also, presumably, Cook believes Apple stock is currently undervalued and will appreciate in the future. (That’s also one of the reasons why Apple’s stock buyback program makes good business sense.)
But the biggest reason for not donating now is simply that a large portion of Cook’s wealth is not actually his yet. He owns something like $500 million in unvested RSUs.
