More about Gifts of Appreciated Securities
You can receive a tax break by giving appreciated securities to Woodland Healthcare Foundation. Whether it's 100 shares of blue-chip stock or a new high-tech gadget, the government allows you to deduct these gifts as charitable donations and avoid capital-gains tax on the transfer.
This double benefit means that you can leverage a larger donation by using appreciated securities rather than cash to make your gift. Here's how it works:
| Assumptions: Donor in 33% Income Tax Bracket; Capital Gains Tax Rate 15% |
| |
$10,000 Cash |
$10,000 Stock Cost Basis $5,000 |
$15,000 Stock Cost Basis $7,500 |
| Charitable Deduction |
$10,000 |
$10,000 |
$10,000 |
| Tax Savings @ 33% |
$3,300 |
$3,300 |
$4,950 |
| Capital Gains Tax Saved |
$0 |
$750 |
$1,125 |
| Net Cost of Gift |
$6,700 |
$5,950 |
$8,925 |
Important: Don't sell the stock first! Even though you give Woodland Healthcare Foundation the proceeds as a gift, the IRS will impose capital-gains tax on your sale, wiping out the benefits of this arrangement.
How will you value my stock?
Your gift will be valued by averaging the high and low prices for the stock on the date of the transfer to Woodland Healthcare Foundation. If the high bid was $80 and the low was $70 on the day you made your gift, your deduction will be $75 per share. If your stock is held by your broker, the date of transfer is the day the shares reach the Foundation's account. If you hold the certificates yourself and mail them to the Foundation, the day of transfer is the postmark date on the envelope.
Is my gift fully deductible?
Yes, within this limitation: The IRS allows you to deduct gifts of appreciated assets up to 30% of your adjusted gross income ("AGI" is – the figure at the bottom of the first page of Form 1040). Thus, if your AGI will be $100,000 this year, you will be able to deduct up to $30,000 in gifts of stock. Also, you can carry over a gift in excess of the 30 percent amount through the next five tax years following the year of your gift.
I have appreciated stock that pays me a dividend. If I donate it, I'll lose the little income it provides. But, if I sell it, I'll have to pay capital gains. Is there a solution?
Yes, a number of plans allow you to make gifts while retaining a fixed or variable income for life or a specified period of time. Some gift plans make possible for appreciated securities to be sold and reinvested with reduced or eliminated capital-gains tax. The entire value of the contributed asset is then available to receive greater earnings. Learn more about life-income gifts - charitable gift annuity, charitable remainder annuity trust, and charitable remainder unitrust – and compare their benefits
How to transfer securities:
Complete and follow the stock transfer form instructions. If you hold the shares yourself, use two envelopes. Place the unendorsed certificates in the first envelope. Then, in a separate envelope mail a signed stock power for each stock certificate. You can obtain stock powers from your bank or brokerage house. Please use certified mail.
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