Stocks & Appreciated Securities
If your client itemizes his taxes and files IRS form 8283, he may claim a federal income tax charitable deduction for the fair market value (FMV) of securities held more than one year up to 30% of adjusted gross income (AGI). For amounts that exceed that 30% ceiling, your client can carry the deductions over for five additional years. For stock held less than one year, your client may deduct the cost basis of the stock up to 50% of AGI. This also includes a five-year carry over period.
Your client will pay no capital gains tax on donations of appreciated stock and securities.
Stock gift example
Client profile:
- As they do every December, Patrick and Elaine are preparing to write a check for $5,000 as a year-end gift to their favorite charity.
- Patrick and Elaine hold $8,000 in appreciated stock that they bought 10 years ago for $5,000. If they sell the stock, they will incur a significant tax bill because of the capital gains on the stock.
Client opportunity:
- By using the $8,000 in appreciated stock to make a gift directly to their favorite charity this year, they avoid the capital gains tax. Because of the “appreciation factor” of the stock gift, they end up donating a greater dollar amount to the charity without it affecting their current cash flow.
- Click here for Gift of Securities Instruction sheet
Please contact Elena at Elena@cf-sc.org or call (425)212-4056 for further details about this type of gift.