Gifting Appreciated Securities

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Gifting securities

With the stock market near record highs, now is a great time to consider a gift of securities. Donating long-term appreciated securities directly to SDCF –rather than selling and donating the cash proceeds—is one of the easiest and most tax efficient ways to give. If you want to maximize the power of your charitable giving, you should consider a gift of long-term appreciated securities.

A contribution of long-term appreciated securities (stocks, bonds, mutual funds held for more than one year) is extremely tax-efficient for two reasons:

  1. Since the securities are donated rather than sold, capital gains taxes are entirely avoided. The greater appreciation the securities have, the greater the tax savings.
  2. Donors giving long-term securities are entitled to an itemized deduction for the full fair market value of the securities donated. Donors can deduct up to 30% of their adjusted gross income annually. Any excess can be carried forward for up to five years.

A simple illustration shows the benefits:

  Donate Security Sell Security (donate cash)
Current Value of Security     $10,000             $10,000
Capital Gains Tax (15%)     $0             $1,500
Charitable Contribution/Deduction     $10,000             $8,500

Itemized Deducation Value (25%) less Capital Gains Tax Paid

     $2,500              $625

Everyone’s circumstances are different; therefore you should consult your tax advisor for information relevant to your situation.  

Donating securities to SDCF is easy and tax efficient. Contact our office today for more details.