Donating Appreciated Property
With the holiday season now in full swing, the spirit of giving is in the air and we want to make sure you to get the most out of your charitable contributions. If you follow this tax-savvy gifting strategy, both you and your qualified charitable organization will come out winners. So… this year, try gifting appreciated assets such as stocks, bonds, or mutual funds to your charitable organizations instead of simply writing a check. Here’s why…
… When you gift appreciated assets to a charitable organization, you get to avoid the capital gains tax, you get to deduct the full fair market value of the property, and the qualified charitable organization receives the proceeds from the property tax free. It’s a win-win-win!
Allow us to illustrate: Assume you have stock in ABC Company with a fair market value of $1,000 that you purchased 5 years ago for $500. You can gift the entire amount to a charitable organization and deduct $1,000 on your income tax return. The organization then receives the stock worth $1,000 (which is non-taxable to the charity). On the flip side, if you sell the stock, you will have a $500 gain at 15% thus owing $75 to the Feds. Your net proceeds from this transaction are now $925. Assuming you donate the entire amount to charity, you are only able to deduct the $925 and the charity only receives $925.
So, this holiday season, try something new and donate appreciated stocks instead of cash. However, be diligent because December 31st is the deadline to claim the deductions on your 2011 income tax return. If you would like assistance, more information, or have any questions, don’t hesitate to give us a call. We’re here to serve you.
Teryn Grater and Melanie Kirk are Partners of ATKG LLP, specializing in business and tax advisory services.
Posted by Teryn Grater and Melanie Kirk on 5th December, 2011 | Comments | Trackbacks
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