The gift of an asset, often common stock or mutual fund shares, is a valuable way to make a contribution to a charity and receive tax benefits based on the value of the asset(s). For example, suppose Ted and Alicia in this example had 300 shares of QRX Corporation that they had purchased at $15.00 a share some years ago. The current value in today's market is $36 a share. If they sold the stock in the market, they would have a taxable, long-term capital gains on the difference between their cost and what they would receive from the sale ($36 minus $15 = $21 capital gains per share. 300 shares X $21.00 = $6,300 in capital gains).

They could sell the stock, pay the tax on the capital gains, and either keep or donate the proceeds. If, instead of selling the stock, Ted and Alicia gave the 300 shares to a charity, they would not incur any capital gains and would be able to deduct the current value (300 shares X $36 = $10,800) as a charitable gift. By donating the stock, the charity receives more than it would receive if Ted and Alicia first sold the stock and then donated the proceeds after deducting the capital gains taxes. Also, Ted and Alicia receive a greater tax deduction by giving the stock directly to the charity and avoiding the capital gains tax.

An estate also benefits when appreciated assets are directed (bequested) to a charity. The bequest reduces the estate's value and potential estate taxes by the current value of the appreciated asset (established as the date of death), regardless of the cost basis. The estate also avoids any capital gains taxes on the appreciated asset.

While the gift of appreciated assets often involves stock, other marketable assets, such as land, antiques, and homes, can be utilized as potential gifts with the possibility of valuable tax benefits and of being a partner in a worthwhile program. However, these other assets are reviewed on a case-by-case basis. For more information about gifts of appreciated assets, please contact us so that we can respond to your specific needs.

Return to Wills and Bequests - Pam Adams - or return to Testamentary Trusts - Ted and Alicia.

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Please report any problems to section webmaster. Revised: March 10, 2006 17:43.