But that move, consequently, sparked a debate about why Buffett was moving the $140 billion so quickly. Some readers told CNBC they assumed he was doing it to avoid taxes, and some wondered whether this move would just ultimately slow distributions to actual nonprofit organizations and people in need.
But experts who advise major donors, study tax law, and sit on foundation boards told Fortune the question isn’t really about whether Buffett avoids taxes by making this move. Nearly every billionaire does that. The bigger thing to watch, they say, is how he’s giving it away. This move also reveals more about billionaire philanthropy than only fixating on the tax issue.
The tax savings are real, but they’re mostly beside the point in Buffett’s case
When a billionaire gives appreciated stock to a foundation instead of selling it, several tax consequences disappear at once, Allison Tait, a law professor at the University of Richmond who studies wealth transfer, told Fortune. The stock leaves the donor’s taxable estate, lowering any estate-tax bill at death. And because the shares are given away rather than sold, the donor never triggers the capital gains tax a sale would incur.
“Passing massive wealth directly to heirs or letting it sit in a personal estate at death triggers severe exposure to the estate tax,” she said. “Moving the shares into a foundation completely removes them from the calculation.”
