Ask HN: Donate shares of startup to charity for carryable tax deduction?
https://news.ycombinator.com/item?id=14716110Throwaway account for ovious reasons.
I'm a co-founder at an ~3 year old startup that has closed two rounds of funding and raising a 3rd, giving my founder shares a rather large paper valuation in the 10's of millions. However things have changed, and I lost faith in our leadership and product, and I lack power to do anything about it. So I already parted ways and am working on my next startup.
But those shares remain, and even heavily discounted as common stock my shares are still a life changing amount of money. However I'm personally certain that I have a snowball's chance in hell of actually seeing a liquidity event that pays me out. Nevertheless the investment market has spoken, and investors with the same or better access to information than I have now have decided to make further investments at an even higher valuation.
So.. can I cash out on this? My shares are illiquid, subject to all the usual restrictions. But I would have no trouble convincing the company to allow me to donate a large percentage to a charity of my choice, or even a self-directed charitable fund. I should then be able to claim a tax deduction equal to the paper value of the shares today. While my bank account will still remain empty, it would allow me to pay approximately zero federal taxes from now until I stop working, giving me effectively a 35% salary boost. And this wouldn't be tax fraud -- the new investments coming in demonstrate that sophisticated investors who know what they are doing and should be trusted more than me, do in fact think the company is worth this amount or more.
Did I miss something? Some googling hasn't shown any examples of this. I've read examples of successful entrepreneurs transferring shares into charitable organizations, but not any early-stage companies as far as I can see. Surely somebody has done this before?