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Our firm believes strongly in the importance and power of charitable giving, and we gladly serve as a resource for many local Non-Profit groups when generous donors choose to gift stock rather than cash. We all understand that a $1000 check to a charity gives us a personal tax deduction. What might not be so well known or understood is how donors can increase the financial benefit of gifting appreciated stock rather than writing a check.

You pay no capital gains tax on this unrealized “profit” when you donate to qualified charities, and the fair market value of the gift may be fully deductible, depending upon the tax status of the charitable group and your adjusted gross income. (It is always recommended that donors confer with a tax professional in these matters.) The tax-exempt non-profit can then sell the stock without tax consequences.

For example, let’s assume that you bought a stock some years ago for $200. That investment has appreciated and now has a market value of $1,000. Here’s how you would benefit by donating that stock as compared to giving cash

  Stock vs. Cash
Gift Amount $1,000   $1,000
Income Tax Benefit 280   280
(assumes 28% tax bracket x $1,000 gift)      
Capital Gains Tax Avoided 120   -0-
(long term gain @ 15% on $800 profit)      
After Tax “Cost” of Gift $600   $720

This example assumes both a Federal tax bracket of 28% and capital gains taxed at the federal long-term rate of 15%.  For those in the 39.6% tax bracket, the capital gains rate is 20%, substantially increasing the benefit of gifting appreciated securities. Please consult your tax advisor for assistance in determining your tax savings based on your individual circumstances.

We do more than just receive the stock gift into our Non-Profit clients’ accounts; we often assist in the transfer process and always provide the organization with the appropriate gift valuation to use in their acknowledgements to donors. While most gifts are accomplished electronically, from the donor’s brokerage account to the Non-Profit’s account at Gage-Wiley, it’s also possible to gift certificated shares. Please contact your charitable organization or Jane Moss at Gage-Wiley, (800) 332-9558 for more information.