Stock giving allows donors to make significant contributions that enhance their financial and philanthropic goals, such as supporting the Dumb Friends League. One of the more insightful tax moves a donor can make is to use appreciated stock to fund these charitable gifts.
Stocks are purchased with the hope that they appreciate, and a profit is made. Of course, when that happens, the profit is subject to capital gains tax when the stock is sold. For those with philanthropic goals, there is an effective strategy to avoid tax on that gain. If you use long-term, highly appreciated securities to fund your charitable plans, a deduction for the full fair market value of the stock can be realized, and the appreciation as taxable capital gain does not need to be reported—meaning the donor does not have to pay tax on any of their paper gain. This approach is contingent on the donor owning the stock for more than one year. (The one-year determination is what makes the gain “long” as opposed to “short” term and eligible for this treatment when it is used to make charitable gifts.)
Can a charitable gift plan accomplish the following four goals: increase income, reduce income tax, avoid tax on the capital gain and support the Dumb Friends League? The answer is a resounding yes, and we’re happy to help with your charitable objectives. For additional information, please contact Rory Fry, donor relations manager, at 720.241.7163 or firstname.lastname@example.org.
Since state laws vary, you should consult a professional adviser before making a gift to any organization.
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