With the stock market hitting new heights, a charitable contribution of appreciated securities instead of cash can be a very tax-savvy way to support the friars of the Capuchin Franciscan Province of St. Joseph. When you make your gift using appreciated securities – stocks, bonds, or mutual funds – you will save taxes two ways: completely avoid capital gains taxes and receive an income tax deduction for the value of the shares you contribute.
There are some important rules you must follow to benefit from these generous tax savings. First, you must have owned the shares for more than one year before your contribution. Second, be sure that you to transfer the shares to us – do not sell the shares yourself because then you would owe capital gains tax.
The chart that follows shows the tax savings from a gift of appreciated securities compared to a gift of cash.
Gift of Cash vs. Gift of Stock
|
|
Cash Gift |
Stock Gift |
|
a. Gift Value |
$10,000 |
$10,000 |
|
b. Income tax deduction |
$10,000 |
$10,000 |
|
c. Income tax saved (at 37% rate)* |
$2,400 |
$2,400 |
|
d. Purchase price |
- |
$2,000 |
|
e. Increase in value (a - d) |
- |
$8,000 |
|
f. Tax avoided on gain (at 15% rate) |
- |
$1,200 |
|
g. Total tax savings (c + f)* |
$2,400 |
$3,600 |
Your tax savings will depend upon your tax bracket. These savings assume you itemize your deductions, but you can still enjoy the capital gains tax savings even if you do not itemize.
Maybe you are reluctant to part with your shares because they continue to increase in value. If so, consider giving the shares and purchasing new shares using cash; you will avoid all the capital gains tax to date and have a new higher cost basis when you sell the shares in the future.
Or, perhaps you’ve thought about selling your shares to produce more income but are hesitant because of the capital gains tax. If so, let us show you how a charitable gift annuity or a charitable remainder trust can allow you to contribute your appreciated shares to the Capuchins and receive a lifetime income in return.
Congress provides these tax incentives to encourage philanthropy. By taking full advantage you may find that you can make a more generous gift than you thought possible to support the friars of the Capuchins Province of St. Joseph and reduce your tax bill at the same time.
We would be happy to work with you and your advisors to help you make the very best gift possible.