Apple CEO Tim Cook Donates Nearly $5 Million in Stock to Charity

[PickUrPoison]

I'm not disputing that, it is how it works - I'm simply pointing out that whether the money goes towards this month's tear-jerking tragedy or some vague "foundation" just to get a tax write-off, the end result is the same for the donor. Wealthy people give money because there's a benefit at the end, otherwise they wouldn't do it or they wouldn't give as much (as observed in several countries, when rules get changed and tax write-offs for donations decrease, donation rates go down sharply).

You’re generalizing. In Cook’s case, he’s donating his entire fortune of $1+ billion before his death. He’s not doing that to save a couple hundred million in taxes.

There’s no benefit to him at the end. At the end, he’s broke—and he’s dead. The only thing you’re “simply pointing out” is your own cynicism.

 

[unplugme71]

You're assuming the company share price has peaked. What if it doubles again?

It’s very possible but why gamble with charities who need funding today? Why not at least give out a significant portion (ie 20% or more) now?

If you have the means and the charity needs the funding to keep pace, you are only hindering them from making progress (assuming you plan to help that charity anyway).

 

[ignatius345]

In the past, Cook has said that he plans to give away the vast majority of his wealth. In a 2015 interview with Fortune, Cook said he had already started donating money quietly and had plans to create a "systematic approach to philanthropy."

Good for him. When a very few people in the country own most of the wealth, well, something's gotta change.

 

[tranceking26]

I'm pleased to see him do this. I hope he picked a good one, like I try to do when I donate.

 

[scottjgo]

I agree it's not "just a tax writeoff", but I do feel like some of the commentors don't understand the implications of donating appreciated stock. Tim started working at Apple in 1998, when the stock was, according to yahoo finance, worth less than 1$/share, whereas now it's worth 219$/share. That means, it's possible if he sold that 5M$ in stock, it would be almost a full 5M$ in realized cap gains. With the highest possible cap gains tax bracket federal + california of 37%, he would take home 3.15M$ BUT if he donates it, he can write off the full 5M$ as a deduction. Assuming he is in the max ordinary income tax bracket (fed + ca) of >50%, that means he could possibly deduct up to 2.50M$. That means donating to charity will cost him the difference, around 650k$, compared to selling the stock and paying taxes (costs him 1.85M$), and still result in a 5M$ charitable donation.

So basically he paid 650k$ to donate 5M$. Not free, but if you were going to donate anyway, this is the most tax efficient way to do it, and he may have frontloaded this donation in order to help offset a higher income this year. This strategy is different than just donating cash, because it allows you to skip taxes on both the spread on the stock, and some ordinary income.

So it goes to show it costs him almost 10x less to make that donation than it would cost a normal person. That said, it's still great that he's being charitable with his wealth.

Disclaimer: tax laws are pretty complicated and I doubt I got the numbers exactly right.

 

[PlayUltimate]

I agree it's not "just a tax writeoff", but I do feel like some of the commentors don't understand the implications of donating appreciated stock. Tim started working at Apple in 1998, when the stock was, according to yahoo finance, worth less than 1$/share, whereas now it's worth 219$/share. That means, it's possible if he sold that 5M$ in stock, it would be almost a full 5M$ in realized cap gains. With the highest possible cap gains tax bracket federal + california of 37%, he would take home 3.15M$ BUT if he donates it, he can write off the full 5M$ as a deduction. Assuming he is in the max ordinary income tax bracket (fed + ca) of >50%, that means he could possibly deduct up to 2.50M$. That means donating to charity will cost him the difference, around 650k$, compared to selling the stock and paying taxes (costs him 1.85M$), and still result in a 5M$ charitable donation.

So basically he paid 650k$ to donate 5M$. Not free, but if you were going to donate anyway, this is the most tax efficient way to do it, and he may have frontloaded this donation in order to help offset a higher income this year. This strategy is different than just donating cash, because it allows you to skip taxes on both the spread on the stock, and some ordinary income.

So it goes to show it costs him almost 10x less to make that donation than it would cost a normal person. That said, it's still great that he's being charitable with his wealth.

Disclaimer: tax laws are pretty complicated and I doubt I got the numbers exactly right.

All relatively true. However, his net worth was still reduced by $5M; which is the point of the tax deduction. Just because he acquired stock and it appreciated and then he donated it at the appreciated value does not diminish the reduction on his net worth nor reduce the donation's value to the charity.

 

[jbachandouris]

Whatever his reasons, I seem to recall Steve Jobs being opposed to charitable giving. At least according to what I had read...

 

[lederermc]

This is why we need a 90% bracket and non-earned income tax the same as earned income.