Appreciated Assets such as Stocks and Mutual Funds

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).Suppose Richard and Terri in this example 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, instead of selling the stock, they gave the 300 shares to their charity, 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 charity receives more 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.

While the gift of appreciated assets often involves stock, other marketable assets, such as land, antiques, and homes, can be utilized as potential gifts with the possibility of valuable tax benefits. However, these other assets are reviewed on a case-by-case basis. For more information about gifts of appreciated assets, please contact us so we can respond to your specific needs.

Return to Wills and Bequests - Pam Adams - or return to Testamentary Trusts - Ted and Alicia.