By Cydney Posner

There is an article in the NYT today that reports on another academic study purporting to show that executives often make large gifts of their company’s stock to their family foundations shortly before the stock price drops sharply, with the result that the executives are able to claim the maximum possible tax deduction and escape capital gains taxes. The study also identified patterns suggesting that some gifts of stock might have been backdated to enhance their value. Sound familiar? Although the author recognized that charitable gifts of stock, even well-timed ones, were not illegal (I don't think he was referring to the backdating), he nevertheless compared them to insider trading. Past experience suggests that this study may be a harbinger of future legislation or regulation, if not a downright scandal.

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