It’s a bull market and it has been a banner year for asset growth. You may be holding some very lucrative stocks right now. Consider making your year-end gift using appreciated assets.  Gifting these items not only allows you to make a more impactful gift, but also can provide you with several tax benefits.

You get a “2-fer” tax break.

  1. First, you avoid any capital gains tax on the donated asset’s appreciation.
  2. Second, if you itemize you can deduct the asset’s full fair market value at the time of the donation.

Most common types of appreciate assets we receive are gifts of stock, but we can accepted real estate, art, jewelry and more. Internal Revenue Service Publication 561 offers an idea of what’s involved in the donation of gems, jewelry, art, and antiques.

Follow these basic rules:

  1. The key here is to donate a long-term asset, one you’ve owned for more than a year. The Community Foundation will accept the asset (stock), sell it and deposit the proceeds into a Donor Advised Fund or a fund of your choice! A Donor Advised Fund affords the benefits of a family foundation, but with great tax benefits and none of the administrative tasks – just the joy of the grant making.
  2. If you give away property you’ve owned for a year or less, you only claim a deduction on the price you paid for it.
  3. If you sell the long-term asset yourself, you’ll have to pay the taxes due on your capital gains.
  4. You also must gift stock to a qualified charity and document your gift – of course we are a 501c(3) charity and we provide you a receipt for your donation!
  5. And there are special rules for appreciated property other than the standard stocks, bonds, other securities or real estate. But we are happy to help you donate any asset that can be valued.

Check out this example:

Let’s say Scott is in the 25th percent federal tax bracket and has $5,000 in appreciated stock he wants to donate.

  1. If he sells the stock and donates the proceeds from the sale, he will only end up donating $4,250. The other $750 is used to pay long-term capital-gains taxes at the 15 percent rate. Plus, even though Scott sold $5,000 worth of stock, he can only deduct $4,250.
  2. Instead, if Scott donates the shares directly to any Fund at the Community Foundation, there are no capital-gains taxes, and he can deduct the full $5,000.  Even better, the Fund he chooses will receive the full $5,000 value of the donation.

The Community Foundation can partner with you to help fulfill your personal, financial and charitable wishes. You can start a new fund or make a donation to any of the Community Foundation’s Funds that support a wide range of organizations, schools and causes.  Find a Fund 

 For more information, contact Lisa Geren

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