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Gifts of Appreciated Securities
(and other assets)
Goal: Avoid capital gains tax on securities sale
Benefit: No capital gains tax and charitable deduction based on fair market value
The gift of an appreciated asset, often common stock or mutual fund shares, is a valuable way to make a contribution to a charitable organization and receive tax benefits based on the value of the asset(s). Suppose Richard and Terri had 300 shares of XYZ Corporation that they purchased at $15 a share some years ago. The current value in today's market is $36 a share.
If they sold the stock in the market, they would have a taxable, long-term capital gain on the difference between their cost and what they would receive from the sale ($36 minus $15 = $21 capital gain per share. 300 shares X $21.00 = $6,300 in capital gains).
Richard and Terri could sell the stock, pay the tax on the capital gain, and either keep or donate the proceeds. If, however, instead of selling the stock, they gave the 300 shares to charity, they would not incur any capital gains and would be able to deduct the current value (300 shares X $36 = $10,800) on their tax return as a charitable gift. By donating the stock, the charity receives a larger gift than it would receive if Richard and Terri first sold the stock and then donated the proceeds after deducting the capital gain taxes. Also, Richard and Terri receive a greater tax deduction by giving the stock directly to the charity and avoiding the capital gain tax.
Another value to using appreciated securities instead of an anticipated gift of cash is to increase the cost or basis value of securities you want to hold for further appreciation. Suppose you hold a number of shares of a startup company and have a cost basis greatly below the current market value. Anything you sold would be subject to capital gains. But, suppose you gave some or all of the stock to charity and then purchased the same number of shares at the current value in the marketplace. It would be similar to giving that amount of money to charity. But instead, you now have shares of stock with a current basis and you have significantly reduced your future capital gains liability on those shares. And, you have a charitable gift deduction equal to the current value of the stock you gave.
While the gift of appreciated assets often is stock, other marketable assets (called tangible personal property) can be utilized as gifts with the possibility of tax benefits. These are assets such as real estate, antiques, coin or stamp collections, and art. However, these are reviewed on a case-by-case basis. For more information about gifts of any appreciated assets, please contact us so we can respond to your specific needs.
Return to Wills and Bequests or to Charitable Lead Trust story.
For more information or a confidential discussion of your charitable options, please email or call Dawn Kuhn, the Vice President for Individual Giving, at (727) 687-9190.
Please note, individual financial circumstances will vary. The information on this site does not constitute legal or tax advice. Donor stories and photographs are for purposes of illustration only. As with all tax and estate planning, please consult your attorney or estate specialist. All material is copyrighted and is for viewing purposes only. Use of this site signifies your agreement with the terms of use. The content in this Planned Giving section has been developed for Big Brothers Big Sisters by Future Focus. Please report any problems to section webmaster.
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