Except for the charity donation
First, she gets a massive tax receipt to use against other income. I don't know how it works in the US, but in Canada you can use charitable tax receipts to lower taxable income in future years if you don't want to use the whole thing in the year in which you made the donation.
Second, she donated to a donor advised fund, or DAF. A DAF is a charitable entity that is sort of like a bank account: you put your money in, get the tax receipt, your money manager invests the capital, and you can allocate some portion of the money (the amount depends on the financial institution's policies) to actual 501c3's (I.e charities doing charitable work).
DAFs are just another instrument offered by the Fildelities of the world to increase assets under management.
The most common reason people give to DAFs is so they can get a tax receipt for the current year and defer the decision about which charities to support until later.
Plus giving stock to charity is the most tax-efficient way to give. She gets the tax receipt for $148m regardless if the stock goes down after the donation. And if it goes up, she has more to give to charities.
I've Had a long term contract to build an online donor advised fund, so my head has been in this space for 8y or so.
I don't know how this can be a tax-dodge of any significance. Surely you can only offset your tax by the amount you donated anyway so it makes no difference to you in the end.
You just locked in the 'donation' tax write off amount at the peak value of the stock ($100M), but it can sit in your DAF for 2 years until you finally sell it for $20M (an give it to an actual charity). Going forward, you've got $100M your can deduct from your future taxes/income, that was only really worth $20M. You have effectively captured the value of the over inflated stock in the form of not paying any more taxes for a long time going forward.
This is how the rich get out of paying taxes. ;)
AKA Let's say you get 75$ after state and federal capital gains on 100$ in stock ~(25% Tax). You deduct 100$ from your taxes not 75$ and you can deduct that 100$ from earned income which is taxed at ~40% federal + 13.3% state call it ~50$ in tax savings. Net result you donated 100$ to an organization of your choice at the cost to you of (75$-50$) ~= 25$. And don't forget you can call a lot of things charity's.
http://www.fidelitycharitable.org/giving-strategies/tax-esta...
1. http://www.nytimes.com/2015/12/02/technology/mark-zuckerberg...
So, in this case, it seems like a pretty significant tax-dodge -- on the order of $30MM.
I can create a Betterness Foundation, and donate all my income to it, and you can do, and the Foundation can spend its resources bettering the neighborhood where you and I happen to live, but no one else lives there. This is a scam loophole to avoid Federal taxes that are intended to benefit society at large.
Yes, there's a large chance that if Mr. X sets up a DAF, you might see people with the last name X doing various work for the DAF etc. Same if Mr. X ran a for-profit business. But there are rules and regs and you can't just blatantly self-deal and loot your foundation; see https://www.irs.gov/irm/part7/irm_07-027-020.html
The truly naive shenanigans don't work and there actually is scrutiny of foundations. Plus, foundations have to distribute 5% of their assets annually, which has actually been sort of a problem lately with low fixed-income returns.
If you want to know the "scam," others above have described quite adequately the two main lines: the tax write-off and the ability to influence what charities benefit. The scam is not that you can set up a "Mr. X's landscaping and Champagne pouring foundation" to privatize all the benefits.
(I mention this not to chastise parent, but because left without any additional color, parent comment could make a reader not versed in how nonprofit stuff works overly cynical.)