As far as I know, that's not how taxes work. You can't get a rebate for the amount of taxes you would have paid, you can get a deduction for the amount of money you made.

So:

You made $100M owe $40M in taxes.

Your painting is worth $30M! You have such a keen eye for art.

Now you made $130M and owe $50M in taxes.

You donate the painting, you're back at having made $100M and owing $40M.

Otherwise we'd all choose not to pay tax and donate our tax money to charitable institutions instead.

I’m pretty sure he’s right in how taxes work. There’s no moment where the value of the painting is realized but you are allowed to deduct the FMV if you make enough and if the donation goes to the charity’s exempt use (which it will if it’s a museum or whatever).

So if you buy painting for a dollar and wait a year then next year you make $3m and the painting is now worth $1m then if you donate it, your AGI is reduced to $3m-min($1m, 30% of income) = $3m-$900k.

You don’t count the appreciation of the painting as income. You don’t even count it as LTCG if you don’t sell it.

I think it also applies to stock option awards. When the startup I was at was acquired some people were talking about it.