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Donate/Needs: Stewardship Information
Benefits of
Appreciated Stock or Mutual Fund Gifts
If you hold highly appreciated stock which
you have owned for more than one year,
consider this asset for your gift to your
favorite Non Profit Organization.
Making a charitable gift of stock or other
securities can benefit both you and your Non
Profit Organization:
a) You are entitled to an income tax
deduction for the full fair market value of
the stock on the date of the gift, rather
than the original amount that you paid for
the stock
b) You avoid paying federal and state
capital gains tax on the increase in value
of your stock
c) Increased leverage: Make a larger gift at
a lower cost to you
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Assumptions |
Cash Donation |
Stock Donation |
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$1,000 or 25 shares |
1,000 |
25 shares @ $40/share |
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Original Cost Basis |
$100 |
$4/share |
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Marginal Tax Rate
Capital Gains Rate |
39.6%
20% (held > 1 year) |
39.6%
None |
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Deduction |
$396 |
$396 |
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Capital Gains |
$180 |
-0- |
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"Cost of Donation" |
$784 |
$604 |
Income Tax
Savings: A gift of appreciated securities
owned longer than twelve months qualifies
for a charitable income tax deduction of the
fair market value of the donation. (Fair
market value is described further below).
Currently, you can use this deduction if you
itemize your tax return.
Gifts of appreciated securities are
deductible up to 30% of adjusted gross
income. The deduction is available in the
year of the gift. If the entire deduction
cannot be used in the first year, there
would be a 5 year carry-over for any excess.
Capital Gain Tax Savings: In addition to a
charitable income tax deduction, neither you
nor your favorite Non Profit is liable for
any capital gain tax on the subsequent sale
of those securities by your favorite Non
Profit.
Valuation of Securities for Tax Deduction:
The amount of the contribution is determined
by the value of the contributed securities
as of the date of the gift. Assuming that
you have owned the donated securities more
than twelve months, the value is calculated
as follows:
Publicly traded stocks and bonds: The fair
market value is the mean of the quoted
prices of the securities on the date of the
gift. (High + Low divided by 2 = Mean, Mean
x Number of Shares = Fair Market Value).
Mutual funds: The fair market value is its
public redemption price, or net asset value
("NAV"), on the date of gift. (NAV x Number
of Shares = Fair Market Value).
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