Gifting of Appreciated Stock

CAVEAT: This information provided in this section is hypothetical and is provided for informational purposes only. It is not intended to represent any specific return, yield, or investment, nor is it indicative of future results. Actual tax benefits will depend on individual circumstances.

Donating appreciated stock offers advantages over giving cash or other goods. Highly-appreciated securities – investments bought at least a year ago that have increased in value – may be ideal for charitable giving.

For example, consider a gift of common stock bought for 1,000 and it’s now worth $10,000.

Scenario 1: Sell the stock and give the cash to a favorite charity.

• The charity receives a cash gift of $10,000
• The donor deducts $10,000 from next year’s taxes, if said donor itemizes
• The donor incurs $9,000 capital-gains tax from the difference in value: or $1,350 (assuming the current Federal long term capital gains tax rate of 15%)
• The donor’s after-tax donation is effectively $8,650.

Scenario 2: Give the highly-appreciated stock to the charity.

• The charity receives a gift valued at $10,000
• The donor deducts $10,000 from next year’s taxes
• Capital-gains taxes are avoided
• The donor’s tax-efficient gift remains at $10,000

Did the intent to support a worthy cause or the value of a generous gift change in either scenario? No, but as seen the method of donation certainly has an impact on the donor!

A charitable 501(c)(3) organization, like Washington Masonic Charities, does not pay capital-gains taxes on the appreciated amount. So this charitable giving method allows the donor to essentially secure the lower original purchase price for the charity’s benefit while preserving cash for other uses.

Donors should contact a financial advisor to learn more about smart charitable giving strategies such as gifting of appreciated stock

Washington Masonic Charities, Tax Identification No. (TIN): 91-1663363

PO Box 65830 University Place, WA 98464