Mark Zuckerberg has written a post on Facebook defending his plans to transfer 99 per cent of his family’s Facebook stock to a limited liability company that would pursue various community projects.
Zuckerberg, the chief executive and controlling shareholder of Facebook, said that he and his wife, Dr Priscilla Chan, were channelling their wealth through a limited liability company (LLC) instead of a more traditional foundation to give themselves maximum flexibility “to pursue our mission by funding nonprofit organizations, making private investments and participating in policy debates in each case with the goal of generating a positive impact in areas of great need.”
In his post, he addressed concerns that the structure was a way to avoid taxes on the $45 billion block of stock.
“In fact, if we transferred our shares to a traditional foundation, then we would have received an immediate tax benefit, but by using an LLC we do not. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC,” he wrote.
Limited liability companies have been used by some other wealthy philanthropists to give themselves more control over how their money is used. Because they are tax-exempt, traditional nonprofit organizations and foundations face restrictions on for-profit endeavors and political activity, two areas in which Zuckerberg and Chan have pledged to be active.
Zuckerberg and his wife have previously used limited liability companies for some of their other community-oriented endeavors. For example, in September, they invested $5 million in MasteryConnect, an education measurement company, through Zuckerberg Education Ventures LLC.
Zuckerberg’s latest explanation met immediate skepticism. On the very post in which he defended his plans, one Australian man commented, “just another way to get your billions tax-free.”
Zuckerberg quickly responded, “This isn’t correct and the link you shared has a bunch of false information. We will pay tax just like everyone else when the Chan Zuckerberg Initiative sells our Facebook shares.”
NEO Web Desk