If you had invested $100,000 in Berkshire Hathaway. It may be worth $1,100,000 or much much more.
Sell it and you are subject to capital gains of 7% in Nebraska and Federal of 15%.
Seller owes:
state tax of $70,000 plus federal tax of $150,000 Total = $220,000.
Open a private foundation & put the full $1,100,000 into the foundation and let the foundation's tax free status save you from paying any capital gains. But you have given the money away so aren't you worse off? Your foundation pays you back at 10% a year for 10 years. So in 10 years you have received 100% of you donation.
If you die in the meantime, you get nothing and you may not leave it to heirs as you no longer own it.
... but you may set heirs up on the board of the foundation and pay them management fees (think Kennedy foundation.) Foundations never go away. A honey pot in perpetuity.
A foundation with tax exempt status is not taxed on gains. Compounding works in a hurry and the foundation you control makes gains on top of gains.
If you don't want to risk dying before the full payout, you may purchase a decreasing term life insurance policy which pays back fully to your heirs what has not been received. Now that you understand foundations, its clear Billionaires have dodged the capital gains taxes on 100s of billions AGAIN. They want you to pay taxes.
