Charitable Stock Contributions
Now is the time that our
favorite charities and schools are contacting us for their annual fund
drives. We would like to take this moment to remind you of an alternative
way to make these donations.
If you desire to make a relatively
substantial contribution, you may want to consider donating appreciated stock
from your investment portfolio (which you have held for more than one year),
instead of using cash. By using appreciated stocks, you will receive the
same benefit without using current cash.
For example, let's assume that
you wish to contribute $10,000 to a charity. Let's also assume that you
own a stock, which is currently worth $10,000, and which cost you $2,000 three
years ago. If you sell the stock, and donate the $10,000 of cash to the
charity, you will get a donation of $10,000. You will also have a capital
gain of $8,000, and a new income tax liability.
On the other hand, if you donate
the stock directly to the charity, you will get the same $10,000
deduction. However, you will avoid the income tax, because as long as you
held the stock for at least one year, there will be no recognized gain for tax
purposes. The charity will be just as happy to receive the stock, which
it can sell to obtain the cash.
If you would like to discuss
this method of charitable giving, please contact us, so we can review the
potential benefits, and the possible limitations or problems.
