Stock Gifts
The Benefit of Giving Stock Gifts:
(1) Enabling you to avoid paying capital gain tax on the appreciation
(2) Deducting full fair market value of the security at the time of the gift
(3) Supporting Free Market in strengthening families in Texas
*As long as you have held the security for longer than 12-months, giving through appreciated securities can work as follows:
Mary bought stock 15 years ago for $1,000. The stock has appreciated significantly and is now worth $10,000. Mary decides to donate the stock directly to Free Market Foundation. If Mary itemizes, she will get a $10,000 charitable income tax deduction even though she only paid $1,000 for the stock. Mary avoids paying a capital gain tax on the $9,000 of appreciation ($10,000 minus $1,000). The tax avoided could be $1,800 ($9,000 x 20%). Since she transferred the stock directly to Free Market, versus selling the stock, she also avoids paying a sales commission with her broker.
|
Gifting Appreciated Assets Chart |
Sell Stock
and
Gift Proceeds |
Gift Stock |
|
Value of Asset |
$10,000 |
$10,000 |
|
Original Purchase Price |
-1,000 |
-1,000 |
|
Amount of Appreciation |
$9,000 |
$9,000 |
|
Value of Asset |
$10,000 |
$10,000 |
|
Capital Gain Tax (20% Fed )* |
-1,800 |
N/A |
|
Proceeds to Ministry (Asset minus Tax) |
$8,200 |
$10,000 |
|
Your Tax Savings (45% Federal & State)** |
$3,690 |
$4,500 |
Note: Even though many people have seen this type of growth in today's stock market, the above example is for illustration purposes only. However at this time, this example does not apply to tax-exempt retirement plans.
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