A Donation Option With Double the Tax Benefits
Despite any market uncertainty of late, many of your investments are likely still worth more today than what you originally paid for them. And if you sell, you would pay capital gains taxes at a maximum rate of 20 percent. But by using appreciated securities you've owned for more than one year as a charitable gift, you will receive two tax benefits:
- You are entitled to a federal income tax deduction based on the current fair market value of the securities, regardless of their lower original cost.
- You will be exempt from paying capital gains taxes on any increase in value—taxes you would pay if you were to sell the securities.
How to Make a Gift of Stock
If you have the physical securities:
- hand-deliver them to us; or
- mail us the stocks and stock power separately.
- instruct your broker to electronically transfer your intended shares; and
- ask your broker to notify us once the transfer is complete.
Cash vs. Stock: Which Gets More Bang for Your Buck?
Throughout her working years, Kim saved and invested diligently to prepare for retirement. Now that she is retired, she is ready to diversify her portfolio and wants to use $100,000 in stock (which she originally purchased for $60,000, resulting in a $40,000 gain) to fund a gift to Tallahassee Memorial HealthCare Foundation, Inc.. Take a look at the chart below to see how Kim will benefit from giving her stock directly to us as opposed to selling it and donating the proceeds.
|Maximizing Tax Savings With a Gift of Appreciated Stock|
Kim’s Gift Options
Gift of Cash
Gift of Stock
|Value of Gift||$100,000||$100,000|
|Kim’s income tax savings
($100,000 x 28% tax bracket)
|Capital gains tax savings
($40,000 x 15%)1
|After-tax cost of Kim's gift||$72,000||$66,000|
|Kim's gift of stock delivers significant tax advantages over a cash donation, allowing her to help Tallahassee Memorial HealthCare Foundation, Inc. at a lower after-tax cost to her. In both scenarios, we receive $100,000 to support our work.|
|1$60,000 cost basis|
Let Us Help
To learn more, contact Paula S. Fortunas at 850-431-5752 or email@example.com. Together with your advisor, we can help you fulfill your charitable goals while avoiding worries over tax consequences or market conditions.
|Take our quiz to see how much you know about making donations and the records that you should be keeping.|
Copyright © The Stelter Company, All rights reserved.
The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.