Given that your god is involved, this must result in a win-win for everyone right? Not really. The Mormon church has lost $328,797 so far. I didn’t realize this was what Romney meant when he said he couldn’t release more tax returns because of his church.
From Raw Story:
“In this instance, Romney used the tax-exempt status of a charity — the Mormon Church, according to a 2007 filing — to defer taxes for more than 15 years,” Bloomberg’s Jesse Drucker explained. “At the same time he is benefitting (sic), the trust will probably leave the church with less than what current law requires.”
[T]he amount available to go to the Mormon church has decreased from at least $750,000 in 2001 to $421,203 at the end of 2011 as Romney has collected yearly cash payments from the trust for ten years; the average per year is $32,879.70.
From Bloomberg News:
[A] financial adviser said Romney and his trustee might arrange to compensate the church for the dwindling amount with other gifts.
“It may be that they’ve made provisions for the charity someplace else that will make up for what this isn’t going to give them,” Comstock said.
Back to Raw Story:
Estates lawyer Jonathan Blattmachr told Bloomberg that Romney’s trust benefits from the Mormon church’s exempt status because charities don’t pay capital gains taxes when they make a profit from the sale of assets.
Not paying capital gains is a big deal for Mitt, who financed his education by selling stocks; when he sold stock to get by during his college days, he avoided income taxes, but was still stuck with those pesky capital gains taxes.
“The main benefit from a charitable remainder trust is the renting from your favorite charity of its exemption from taxation,” Blattmachr said, adding that the charitable contribution “is just a throwaway” and the church would receive little if any financial benefit from the trust.
“I used to structure them so the value dedicated to charity was as close to zero as possible without being zero,” he pointed out.
The CRUT allows individuals to “defer capital gains taxes on any profit from the sale of the assets, and receive a small upfront charitable deduction and a stream of yearly cash payments,” Drucker wrote. “Like an individual retirement account, the trust allows money to grow tax deferred, while like an annuity it also pays Romney a steady income. After the funder’s death, the trust’s remaining assets go to a designated charity.”
- Bloomberg News: Romney ‘rented’ Mormon church’s exemption to defer taxes for 15 years (kaystreet.wordpress.com)
- Mitt Romney Reportedly Avoids Taxes Through Mormon Church Trust (huffingtonpost.com)
- Romney Avoids Taxes via Loophole Cutting Mormon Donations – Bloomberg (bloomberg.com)
- Romney Benefits From Zeroed-Out CRUT With Mormon Church (taxprof.typepad.com)