{"id":18483,"date":"2012-01-18T14:29:54","date_gmt":"2012-01-18T19:29:54","guid":{"rendered":"http:\/\/timesandseasons.org\/?p=18483"},"modified":"2012-01-18T14:35:16","modified_gmt":"2012-01-18T19:35:16","slug":"mitt-romneys-tithing-problem","status":"publish","type":"post","link":"https:\/\/timesandseasons.org\/index.php\/2012\/01\/mitt-romneys-tithing-problem\/","title":{"rendered":"Mitt Romney’s Tithing Problem (?)"},"content":{"rendered":"

\"\"<\/a>ABC broke the news<\/a>: Mitt Romney has donated millions of dollars worth of stock to the Mormon church. SEC filings disclose that a Bain partner donated $1.9 million of Burger King stock to the Church; in addition, the Church has received stock of other Bain holdings, including Domino’s, DDi,\u00a0Innophos, and the parent company of AMC Theaters.<\/p>\n

But why? Why would Romney give the Church equity stakes in bad fast-food chains, second-rate pizza chains, and other such holdings?[fn1]<\/p>\n

Taxes. Sure, there may be other reasons, too, but there’s a significant tax advantage to donating appreciated assets to charities.[fn2]<\/p>\n

Remember<\/a>, certain donors to 501(c)(3) organizations, including churches, can take a deduction for donations they make to that organization. An example of how it works: assume that in 2011 I itemized my deductions, that I earned $100,000[fn3], that my marginal tax rate was 25%, and that I wrote a check to the Church for $10,000. As a result of my charitable contribution, I can deduct the $10,000, which lowers my tax bill by $2,500.<\/p>\n

And, it turns out, I get the same deduction if, instead of writing a check for $10,000, I donate, for example, stock worth $10,000. I get a deduction for the fair market value of property donated.<\/p>\n

But that stock donation may save me more than $2,500 in taxes. Because we don’t know right now what I paid for the stock. Assume, for example, that I paid $1,000 for the stock I donate. If I wanted to get access to its $10,000 of value, I would have to sell the stock. I would realize a gain of $9,000, which would currently be taxed at a 15% rate, so I would owe $1,350 of taxes. In fact, if I sold the stock for $10,000 cash, and took those bills and gave them to my bishop, I would still owe $1,350 in taxes on my gain.<\/p>\n

But the gain is not triggered when I donate the stock to the Church. So now I have a $10,000 deduction that saves me $2,500 in taxes, and I have a potential tax liability of $1,350 that will never materialize. And, because money is fungible, by fulfilling my tithing liability with property, I’ve freed up $10,000 of liquid assets to do with as I please.<\/p>\n

And what does the Church do with Burger King stock? It has two options: it can put the stock in its investment portfolio, or it can sell the stock and use the $10,000 it realizes (and doesn’t pay taxes on—remember, the Church, like all 501(c)(3)s, doesn’t pay taxes on its investment income) to do whatever it would have done with the $10,000 in cash that I could have donated. I suspect, in general, that the Church (and, frankly, most charities) takes the second route.<\/p>\n

—<\/p>\n

[fn1] It may be that Romney didn’t donate all of those stocks, but his campaign acknowledges that he donated at least some.<\/p>\n

[fn2] Note that, from this point on, any motive I suggest for Romney or the Church is pure conjecture: I don’t know Mitt Romney personally. It is within the realm of possibility that he had substantive non-tax reasons for giving the Church a share of Burger King. That said, I kind of doubt it.<\/p>\n

[fn3] I should note that the amount of money I earn is something other than $100,000. But, for the sake of mathematical simplicity, every hypothetical person I deal with earns $100,000.<\/p>\n","protected":false},"excerpt":{"rendered":"

ABC broke the news: Mitt Romney has donated millions of dollars worth of stock to the Mormon church. SEC filings disclose that a Bain partner donated $1.9 million of Burger King stock to the Church; in addition, the Church has received stock of other Bain holdings, including Domino’s, DDi, Innophos, and the parent company of AMC Theaters.<\/p>\n

But why? Why would Romney give the Church equity stakes in bad fast-food chains, second-rate pizza chains, and other such holdings?<\/p>\n","protected":false},"author":138,"featured_media":18486,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[56,26,54,55],"tags":[],"class_list":["post-18483","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bloggernacle","category-law","category-mormon-life","category-news-politics"],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/timesandseasons.org\/wp-content\/uploads\/2012\/01\/stock-certificate.jpg","_links":{"self":[{"href":"https:\/\/timesandseasons.org\/index.php\/wp-json\/wp\/v2\/posts\/18483","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/timesandseasons.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/timesandseasons.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/timesandseasons.org\/index.php\/wp-json\/wp\/v2\/users\/138"}],"replies":[{"embeddable":true,"href":"https:\/\/timesandseasons.org\/index.php\/wp-json\/wp\/v2\/comments?post=18483"}],"version-history":[{"count":2,"href":"https:\/\/timesandseasons.org\/index.php\/wp-json\/wp\/v2\/posts\/18483\/revisions"}],"predecessor-version":[{"id":18490,"href":"https:\/\/timesandseasons.org\/index.php\/wp-json\/wp\/v2\/posts\/18483\/revisions\/18490"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/timesandseasons.org\/index.php\/wp-json\/wp\/v2\/media\/18486"}],"wp:attachment":[{"href":"https:\/\/timesandseasons.org\/index.php\/wp-json\/wp\/v2\/media?parent=18483"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/timesandseasons.org\/index.php\/wp-json\/wp\/v2\/categories?post=18483"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/timesandseasons.org\/index.php\/wp-json\/wp\/v2\/tags?post=18483"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}