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Bill Gates Dodges Questions on Why He Owns 500,000 Shares of Monsanto | 408 comments | Create New Account
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Bill Gates Dodges Questions on Why He Owns 500,000 Shares of Monsanto
Authored by: Anonymous on Friday, February 15 2013 @ 07:23 PM EST
Yes, he (indirectly) controls the money, and voting power of the shares of the
foundation.

He followed the most cynical course of "charitable" contributions to a
self-created foundation.

He acquired his shares in Microsoft at essentially zero cost. If he sold them,
he would be taxed on the income (actually capital gains) at their full value.

At that income level, the tax can approach 50%.

On the other hand, he can donate the shares and take a tax deduction. Here is
the key element: the tax deduction is at their market price, not his cost
basis.

So what is done is to create a new charitable foundation, run by friends and
relatives. Then when you need to raise money, donate shares to offset the
amount sold. You then pay zero in income taxes!

Because you've sold only about half the shares you would otherwise have needed
to sell, there is a much lower impact on the stock price from selling. You also
retain effective voting control on those donated shares, which for Gates let him
control the Microsoft board. The charitable foundation is run by your friends
and relatives (Melinda Gates and others), who are typically very, very well
paid.

Bill Gates took this a step further: he used the foundation to promote
Microsoft's business interest. Especially in the early days, the foundation
only funded projects where there was a tie-in with using Microsoft software, or
tied the donation to Microsoft winning a contract. That still happens today,
but they are now more subtle about it.

[ Reply to This | Parent | # ]

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