Mitt Romney established a tax shelter in 1996 that allows him to take advantage of the tax-free status of a charity without actually giving much to the charity at all. Romney set up a charitable remainder trust in 1996, Bloomberg's Jesse Drucker reports, a year before Congress cracked down on them, and so it was grandfathered in. The small amount Romney has disclosed about his taxes has given us a look at the complicated ways people who can afford great tax lawyers can minimize their tax bill. Here's how this method works: 

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.

In Romney's case, that means his CRUT, which officially benefits the Mormon church, pays him 8 percent of its assets a year. The value of the trust has slowly declined. In 2001, it was worth between $750,000 and $1 million, according to disclosure forms and IRS documents Bloomberg analyzed. It was earning a return of between $60,001 and $100,000. A decade later, in 2001, it was worth $421,203. It earned a return of $48. But that year, it paid the Romneys $36,696.

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Elspeth Reeve