Donating Appreciated Stock to Charity
For philanthropically-minded investors, publicly traded appreciated stock can be among the most tax advantaged items to donate to charity. Contributing such assets may enable the donor to potentially eliminate capital gains tax liability on the sale of the assets, enjoy a current year tax deduction, if the donor itemizes, while allowing the charities they support to receive the most money possible.
What Is Appreciated Stock?
Appreciated securities are investments that have increased in value from the time they were purchased, and can take the form of publicly traded stock, exchange-traded funds (ETFs), closely held stock or mutual funds. For example, if a stock was purchased for $30 per shares and sold for $50 per share, the stock has appreciated by $20 per share. When appreciated stock is sold, the owner generally realizes capital gains equal to the appreciation and may be liable for either short-term or long-term capital gains taxes, depending on the length of time the investment was held.
Charitable Tax Planning Opportunity: Donate Shares of Appreciated Stock to Charity
Taxpayers who are considering current year charitable contributions and are also facing long-term capital gains taxes on appreciated stock that they have held for more than a year can realize a much more favorable income tax result and charitable impact by making a timely donation of the appreciated stock directly to charity. If the donor sells the stock first and then donated the cash proceeds to charity, the donor may be subject to capital gains taxes on the proceeds from the sale of the stock. But if a donor contributes appreciated stock held for more than one year directly to a public charity, the donor can potentially eliminate capital gains on the sale and deduct the fair market value (FMV) of the donation, if the donor itemizes.
It is always best to consult your financial advisor and a tax professional when considering gifting appreciated stock to a charity.
FV Cemetery Co. Inc., has established a brokerage account with a local firm to accept donated securities. For further information please contact Myrteen Heslep at 344-4263.