 Helpful Articles
from David Vollrath,
Union County Foundation Executive Director
The Foundation encourages you to work closely with your professional advisor(s)
as you develop your estate plan and consider your present and future charitable goals. |
End of Year Gifts of Stock
(Part of a series of articles on charitable giving and the Union County Foundation
by David Vollrath - Exec. Dir.)
Human beings love to procrastinate. As a result many of us find ourselves scrambling
to make charitable contributions during the few remaining days of the year. Some of you may be contemplating a
significant year-end donation to your favorite charity. The good news is that 2003 clearly is a year in which stocks
increased in value. This stock appreciation should factor in to your decision of whether your year-end contribution
should consist of cash or stock.
Generally a gift of appreciated stock (rather than cash) is far more favorable for you the donor. Here is an illustration
that shows why. If you give your favorite charity a check for $10,000 you receive a tax deduction for $10,000.
Similarly if you donate stock now valued at $10,000 that you purchased for just $2000 you receive that same $10,000
deduction. However, with the stock donation you also benefit from a by-pass of capital gains tax. If you were to
sell the block of stock yourself there would be $10,000 of sales proceeds minus the $2000 cost basis, resulting
in a long-term capital gain of $8000. This capital gain would be subject to federal tax of 15% resulting in $1200
of federal tax. Additionally many states will also tax the capital gain.
Since a charity is tax exempt you can give the stock to the charity and by pass the $1200 tax. The charity will
simply sell the stock and have the full $10,000 (less fees to sell the stock) to put to charitable use. The end
result is that you the donor receive your $10,000 deduction, you avoid the capital gains tax, and the charity benefits
from your generous gift. In this example the donor has contributed $10,000 without taking any cash out of his pocket
or out of his cash reserves. This is but one example of the many ways that donors can support charity through tax
efficient donations.
The Union County Foundation is equipped to help you achieve your charitable goals by providing pertinent information
and assisting you with planned giving. Please call us at 937-642-9618, email commfounduc@imetweb.net, reference our website at www.emarysville.com/unioncountyfoundation, or stop by our Marysville
office at 126 N. Main St. We are committed to helping you.... “preserve your footprint in time.” |
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