The transfer of Patagonia is structured so that Chouinard and his family are still in control of the company, which is worth an estimated $3 billion, according to the
New York Times. But now, because 98% of it has been transferred to the newly established Holdfast Collective, a nonprofit, they don’t have to pay what
Bloomberg estimates could be $700 million in the federal capital gains taxes that would have resulted from a standard sale of the company. And if the Holdfast Collective sells the shares, it also won’t be on the hook for capital gains.
Had Chouinard decided to leave the company to an heir—his two adult children were reportedly not interested in being seen as financial beneficiaries—he would have potentially paid significantly more in estate and gift taxes. The government levies a
40% tax on assets above $12.06 million when they are transferred to heirs. For a $3 billion company, that’s over $1 billion in taxes.