The gift of an asset, often common stock or mutual fund shares, is a valuable way to make a contribution to a charitable organization 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 XYZ 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 gain on the difference between their cost and what they would receive from the sale ($36 minus $15 = $21 capital gain per share. 300 shares X $21.00 = $6,300 in capital gains).

They could sell the stock, pay the tax on the capital gain, and either keep or donate the proceeds. If, instead of selling the stock, Ted and Alicia gave the 300 shares to the American Red Cross, 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 Red Cross receives more than it would receive if Ted and Alicia first sold the stock and then donated the proceeds after deducting the capital gain taxes. Also, Ted and Alicia receive a greater tax deduction by giving the stock directly to the Red Cross and avoiding the capital gain tax.

While the gift of appreciated assets often involves stock, any marketable asset can be utilized that a foundation will accept. Land, antiques, homes and many more different types of assets are potential gifts with the possibility of valuable tax benefits.

Return to Scenario One or to Scenario Four.