The gift of an 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).
For example, suppose Ted and Alicia had 300 shares of XYZ Corporation that they had 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 gains on the difference between their cost and what they would receive from the sale ($36 minus $15 = $21 capital gains per share; 300 shares X $21 = $6,300 in capital gains).
They could sell the stock, pay the tax on the capital gains, and either keep or donate the proceeds. If, instead of selling the stock, Ted and Alicia gave the 300 shares to the Martha’s Vineyard Boys & Girls Club, they would not incur any capital gains and would be able to deduct the current value (300 shares X $36 = $10,800) as a charitable gift.
By donating the stock, the Martha’s Vineyard Boys & Girls Club receives more than it would receive if Ted and Alicia first sold the stock and then donated the proceeds after deducting the capital gains taxes. Also, Ted and Alicia receive a greater tax deduction by giving the stock directly to the Martha’s Vineyard Boys & Girls Club and avoiding the capital gains tax.
Always discuss potential donations with your tax advisor.
For more information about donating stock or if you have already made a gift of stock, please contact Jessie at 508-627-3303 or via email email@example.com