Donations of appreciated securities can be a great way for you to meet your philanthropic goals towards Fabretto while helping you realize a reduction in your personal tax obligation. As a donor, you may receive two kinds of tax benefits from your gift:
1. Deduction for charitable contribution
Like a cash donation, the current value of a stock gift can be deducted from one's adjusted gross income. The stock must have been held for more than one year.
2. Save on capital gains tax
Contributions of stock may have no tax liability on the difference between the donor's original cost of donated stock and its current, fair market value, i.e. there may be no tax on the capital gains.
Here is how it can work:
Assume a purchase of 100 shares of XYZ Corporation 10 years ago for $2,000. Today, the shares are worth $10,000. The chart below identifies the impact on the federal tax obligation of three different options for making a $10,000 donation to Fabretto.
| Option A Give Securities As Gift |
Option B Give $10,000 by Check |
Option C Sell Securities & Give Cash |
|
| Gift Value | $10,000 | $10,000 | $10,000 |
| Ordinary Income Tax Savings | $3,960 | $3,960 | $3,960 |
| Capital Gains Tax | $1,600 Saved | N/A | $1,600 Paid |
| Net Tax Savings | $5,560 | $3,960 | $2,360 |
Gifts of appreciated securities could provide even greater benefits to you through a charitable planned gift arrangement. Click here to learn more about the various giving options.
If you have securities that have declined in value and are interested in donating them, you may find it more advantageous to sell the securities first and gift the proceeds rather than donating the securities outright. This strategy should allow you to claim a deduction for both the loss from the sale of the securities as well as the charitable gift.
You should discuss your options for stock gifting with your personal financial advisor.
