Zuckerberg has been alleged to have moved money from one pocket to the other.
Facebook CEO, Mark Zuckeberg had recently made two major announcements that he and wife Priscilla Chan are now the proud parents of a baby girl, and that they would channelling 99% of their Facebook stock towards charity.
But, according to The New York Times report, Zuckerberg did not donate $45 billion to charity. Instead, he created an investment vehicle.
Reportedly, he created a limited liability company which has already reaped enormous benefits. Zuckerberg has been alleged to have moved money from one pocket to the other.
Also Watch: 'Doting dad' Mark Zuckerberg dedicates touching video to newborn
Rather than set up a private foundation or charitable trust as Bill and Melinda Gates did, the Chan Zuckerberg Initiative will be structured as a limited liability company (LLC), according to Bloomberg Business. LLC is generally set up for tax advantages. Chan Zuckerberg Initiative will put money to work in politics. Mark in a letter to his newborn wrote: "We must participate in policy and advocacy to shape debates."
According to reports, $45 billion was to be dolled out to the new LLC. Zuckerberg has stated that they're donating 99% of the current valuation. It's unclear whether that amount will change with stock appreciation, but we're guessing it won't. According to the SEC filing for the Chan Zuckerberg Initiative, the Facebook head will be donating the shares/amount over the course of his lifetime, but he will maintain control over the voting of the company. As for the CZI's immediate future, it will be funded by three annual donations for next three years, from the sale of Zuckerberg's stock, at a maximum of US $1 billion each year.
So Zuckerberg and Chan may not exactly be directly donating to charity.
NYT reported that a charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year. But, Zuckerberg's LLC won't imply to those rules.
With this they can also avoid the '5 percent' rule. According to Bloomberg Business, Wales of Aspen Institute said, “By setting up a company rather than a foundation, they can spend at the pace which makes most sense for the problem they’re trying to solve or the strategy they are pursuing."
Also Read: Facebook CEO Mark Zuckerberg announced a US $45 billion gift for his new baby girl
There are few tax implications to this. According to NYT, tax specialists explained that if the LLC sold stock, Zuckerberg would pay a hefty capital gains tax, particularly if Facebook stock kept climbing. If the LLC donated to a charity, he would get a deduction. So, if he had created a foundation, he would have accrued similar tax benefits but this means that he is likely never to pay any taxes on it.
Mark Zuckerberg responded to this claim saying that he and his wife would receive no tax benefit from setting up their new philanthropic endeavor as a limited liability company and hinted at the types of efforts it would support.
Also Read: No tax benefit from philanthropic initiative, says Mark Zuckerberg
In a post on his Facebook page, he wrote that "Just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC."
He insisted people not to spread inaccurate information.
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 "Facebook CEO Mark Zuckerberg and wife Priscilla Chan.")
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