Have you owned stock or mutual funds shares for more than a year that have appreciated in value? Donating these may be a better choice than giving by cash, check or credit card.
A gift of appreciated stock allows you to make and deduct a larger charitable contribution than the original purchase price of the shares. You receive a tax deduction for the share's current fair-market value, and completely avoid capital gains tax.
Note: The following scenario is for illustrative purposes. It does not represent an actual donor to GFA.
Many years ago, David purchased stock shares for $100. Today, the shares are worth $1,000. If David sells the stock and donates the proceeds, he may provide about 165 Bibles and receive $108 in tax savings for his charitable donation.
But if David donates the stock directly to GFA, he may provide about 200 Bibles and receive $400 in tax savings for his charitable donation that originally cost him only $100! Here's how:
& Give Proceeds to GFA
Directly to GFA
|Original cost of stock||$100||$100|
|Plus appreciation (gain)||$900||$900|
|Minus long-term capital gains tax*||$180||0|
|Amount of gift to GFA||$820||$1,000
David gives more!
|Tax savings from charitable deduction**||$328||$400|
|Less capital gains tax||$180||0|
|Actual tax saved||$148||$400|
|Net gain after donation
(original cost less tax saved)
David gains more!
*15% federal + 5% state
** 35% federal + 5% state tax
If David likes the stock but also wants to reap the benefits of donating stock, he can donate his stock shares and use the cash he would have donated to repurchase the same stock. This will reset his cost basis and provide tax-free rebalancing of his portfolio.
If your stock or mutual fund shares have lost value, it may be wiser to sell them and then donate the proceeds of the sale to GFA. By selling stock that has lost value, you may be able to write off the loss as well as deduct the charitable donation. This could be a great way to receive two tax deductions from the sale of your stock. You may claim a loss on the value of depreciated stock or mutual fund shares regardless of how long you have owned them.
If you have any questions or wish to start the process for your gift, please fill out our contact form, or call GFA's Harvest Foundation at 800-946-2742.
All gifts are subject to Gospel for Asia's Gift Acceptance Policy.
DISCLAIMER: This web page is designed to provide information and illustration of the subject matters covered. It is not intended, nor should it be used as legal, accounting or other professional advice. It is always a good idea to seek legal and tax advice from your professional advisor(s).