From Bloomberg Romney Avoids Taxes via Loophole Cutting Mormon Donations. According to a 2007 filing that Bloomberg was able to see thanks to a Freedom of Information request, their use of the "charitable remainder unitrust" or CRUT was revealed. While this loophole was changed by Congress in 1997, people who had set them up prior to 1997 were allowed to keep them. Romney's was set up in 1996.
The donor is able to take advantage of the tax-exempt status of, in this case, the Mormon church and defer the taxes. In this case for more than 15 years.
A quote below the squiggle to explain the CRUT....
“The main benefit from a charitable remainder trust is the renting from your favorite charity of its exemption from taxation,” Blattmachr said. Despite the name, giving a gift or getting a charitable deduction “is just a throwaway,” he said. “I used to structure them so the value dedicated to charity was as close to zero as possible without being zero.”
When individuals fund a charitable remainder unitrust, or “CRUT,” they 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. 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.
While according to the article, this is a very small portion of the very big (and unknown) wealth of the Romneys, it is one more way they are paying less and getting more. Even through "charitable giving".
...said Michael Arlein, a trusts and estates lawyer at Patterson Belknap Webb & Tyler LLP
And in the end the benefit, at least through this vehicle, mainly beneifits them not the charity.
In the end, the charity gets, as one person said, "next to nothing".
...big surprise.
Wonder what other FOIAs there are out there and what else they might reveal. Check out the article.