Securities

If you currently have securities that have been held long-term (more than 12 months) that have appreciated (increased in value) since you have owned them, you can donate these securities directly to Boys and Girls Homes.  If you were to sell the securities, you would encounter a capital gains tax on the amount of the increase in value.  This would decrease the amount of the gift you wish to make to Boys and Girls Homes.  When you donate the actual securities you can avoid the capital gains exposure.

The combined benefit of bypassing tax on the capital gain, receiving an income tax deduction, and making a charitable gift can be substantial.

Meet Mark and Diane

Mark and Diane are planning to make a charitable gift to Boys and Girls Homes this year. They normally make their gift in the form of cash. They also own 100 shares of a local corporation that they purchased at $4,000.  It has a current value of $10,000. Let’s take a look at their options.*

 Assumes a 35%
Tax Bracket
Option A
Give $10,000
in Cash
Option B
Sell Securities &
Give Cash
Option C

Give Securities Outright

Gift Value
$10,000 $10,000 $10,000
 Ordinary Income Tax Savings
$3,500 $3,500
$3,500
Capital Gains Tax saved
or paid - Assuming a
15% tax rate
N/A
$900 Paid
$900 Saved
 Net Tax Savings
$3,500 $2,600

$4,400

*Information obtained from "Giving Securities," Sharpe 2011

If they make their traditional cash gift, they will realize a savings of $3,500. If they utilize their stock to make a gift, the obvious choice would be to donate the stock directly to Boys and Girls Homes, thereby realizing a tax savings of $4,400 - almost a 25 percent increase over a cash gift!