Surf great Kelly Slater's ears perk.
But do you remember where you were when you first heard that Patagonia’s founder Yves Chouinard was giving his 3 billion dollar company away in order to save the environment? I was in Newport Beach, Fashion Island to be exact, sipping a cappuccino, wondering if I should get a fussy hamburger or French dip sandwich for lunch in a few hours.
Decidedly not saving the environment.
The move seemed groundbreaking, company head putting money where mouth was by transferring the whole shootin’ match into a trust, every ounce of profit-after-cost going to green causes and pressure immediately began building on noted sustainability activist Kelly Slater to place his own Outerknown into an earth-scrubbing trust.
Were Chouinard’s motives pure as driven, though rapidly melting, snow? Bloomberg has picked up a handful of salt to throw directly in game. Under a blunt headline reading “Patagonia Billionaire Who Gave Up Company Skirts $700 Million Tax Hit,” the left-leaning financial news service declares:
While many billionaires make living donations with tax and estate planning as the primary considerations, Chouinard seems to have structured his Patagonia transfer with at least a few purposes in mind. Holdfast is a 501(c)(4), a nonprofit that can make unlimited political donations — unlike its cousin, the 501(c)(3). For that reason, any giving to a 501(c)(4) isn’t eligible for income-tax deductions. In addition, the Patagonia founder will owe $17.5 million in gift taxes for the shares he transferred to the trust.
Still, the moves mean Chouinard won’t have to pay the federal capital gains taxes he would have owed had he sold the company, an option he said was under consideration. On a $3 billion sale, that bill could be more than $700 million. It also helps Chouinard avoid the US estate and gift tax, which is a 40% levy on large fortunes when they’re transferred to heirs.
While a Patagonia spokesperson flatly denied the trickeration, attention has returned back to the aforementioned Slater. While his green bonafides need no burnishing, it is known that the many-time surfing champion likes to not spend his money. Might tax relief be the finger that tips the scales?