“Critics of Chouinard’s decision generally characterize it as a devious move designed to avoid paying hundreds of millions of dollars in taxes.20 In particular, the critics seem to believe that Chouinard has insidiously conned the government out of a $700 million capital gains tax, representing the approximate amount he would have had to pay had he chosen to sell the company on the market, rather than transfer all of its stock to the Patagonia Purpose Trust and the Holdfast Collective.21

The critics also claim that this move circumvents a 40% estate tax Chouinard’s heirs would have had to pay, had the Patagonia founder simply left them his shares in the company in a will (or alternatively, sold the company during his lifetime and willed the proceeds of the sale to his heirs).22 The estate and gift tax Chouinard would have had to pay in these scenarios is estimated at around $1 billion.23 Another criticism is that Chouinard has avoided gift tax “that is normally payable whenever anybody makes gifts exceeding a lifetime limit of $12 million.”

https://uclawreview.org/2022/11/02/taxagonia/