DONATING LONG-TERM APPRECIATED SECURITIES CAN PROVIDE ADDITIONAL TAX BENEFITS
• When you donate long-term appreciated securities, you can claim a charitable income tax deduction for the fair market value of the securities on the date of transfer, no matter what you originally paid.
• You pay no capital gains tax on the transfer. For example, if the securities originally cost $2,000 and now have a fair market value of $10,000, you do not pay tax on the $8,000 gain and you may claim a charitable income tax deduction for the full $10,000.
DONATING CASH VS. STOCK
In the example above, right, you see that donating the stock results in no capitals gains tax being paid, a larger itemized deduction, and more money for the charity of your choice.
Note, certain federal income tax deductions, including the charitable contribution, are available only to taxpayers who itemize deductions, and may be subject to reduction for taxpayers with AGI above certain levels. Deductions for contributions of appreciated property generally are limited to 30% of the donor’s AGI, however, excess contributions may be carried forward for up to five years.
If you hold securities with a loss, it is usually better to sell first. By doing so, you can take the capital loss for tax purposes and then donate the cash. In most cases, donating appreciated securities can be a cost-effective way to benefit the charities of your choice.
For more information, visit us online at newhavenjewishfoundation.org/retirement-plans-and-charitable-giving