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Elon Musk donated $5.7 billion worth of Tesla stock

2022-02-15T08:14:27.406Z


Tesla CEO Elon Musk donated $5.7 billion in shares in the automaker last year. Experts see this as a major tax advantage.


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Elon Musk (visiting the Tesla factory in Brandenburg in September 2020)

Photo: ALEXANDER BECHER/EPA-EFE/Shutterstock

Last year, Elon Musk asked for tips on how to use donations wisely via Twitter.

Now the entrepreneur has sold assets on a large scale.

To whom, however, is not yet clear.

Observers suspect a tax savings model.

The Tesla CEO donated a total of 5,044,000 shares of the world's most valuable automaker to a charity from Nov. 19 to 29 last year, according to documents he filed with the US Securities and Exchange Commission on Monday.

The donation was valued at $5.74 billion based on the closing prices of Tesla stock over the five days he donated the shares.

The charity's name was not mentioned in the report.

»His tax advantage would be enormous«

The donation comes as the billionaire sold $16.4 billion in shares after he publicly polled Twitter users in early November about giving up 10 percent of his stake in the electric-car maker.

Musk wanted to pay taxes with it.

According to analysts, there is a tax advantage when shares are donated to charity.

Then they are not subject to capital gains tax, as would be the case if they were sold.

"His tax benefit would be huge," said Bob Lord, of the Institute for Policy Studies, who studies tax policy.

"He would save anywhere from 40 percent to 50 percent of the $5.7 billion in taxes, depending on whether he can offset the deduction against his California income, and he would avoid the capital gains tax he would have to pay if he sold the stock."

Lord added that Musk may have donated the shares to charitable groups through intermediaries rather than directly.

Tesla was initially unavailable for comment.

Musk tweeted that he would pay more than $11 billion in taxes in 2021 by exercising stock options that expire.

These options expire after ten years.

According to Forbes magazine, Musk is the richest person in the world with an estimated fortune of around $268 billion.

Depending on the status of their shares, Musk alternates with Amazon founder Jeff Bezos.

Musk's wealth is largely based on stock holdings, which pay him for his work rather than a salary.

These are only taxed when they are sold, which is why he drew criticism from politicians in the USA because rich people like Musk avoid paying higher taxes with such constructions.

The Tesla boss also exchanged blows with politicians Bernie Sanders and Elizabeth Warren, who called on rich people to pay more taxes.

A foundation also bears his name

With his stock donation, Musk has managed to become America's second-biggest donor in 2021, behind Bill Gates and his ex-wife Melinda French Gates, reports the Chronicle of Philanthropy.

This magazine is aimed at philanthropists.

Compared to other super-rich, Musk has so far been reluctant to make public donations.

He is president of the Musk Foundation, which, according to its website, awards grants for the “development of secure artificial intelligence for the benefit of mankind”.

Musk and the foundation have announced a $100 million prize for those who develop technology that can remove carbon from the atmosphere.

Musk announced last year that he would donate $20 million to schools in Cameron County, Texas, the site of a Space X rocket launch site, and $10 million to the city of Brownsville.

mmq/Reuters

Source: spiegel

All business articles on 2022-02-15

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