Would you like to make a large gift to Embrace Kids?
Before writing that check, consider looking through your investment portfolio and donating appreciated stock. Many investors who purchased publicly traded stock more than a year ago are very likely to own shares that have substantial unrealized gains. Upon the sale of this stock an investor would pay a minimum 15% federal capital gains tax on the long term realized gain. In addition, the gain would be subject to state income taxes.
Instead of selling the appreciated stock, consider donating it to Embrace Kids Foundation; it's a win-win situation. Tax benefits include avoiding the 15% capital gains tax and deducting the fair market value of the donated shares as a charitable donation.
For example, Jane Doe purchased ABC Company stock for $10,000 last January; the value of the stock today is $20,000. Since Jane no longer wishes to hold this stock, she therefore has two choices - either sell the stock and recognize a gain, or donate the stock. If Jane was to donate the stock rather than sell the stock, she would avoid paying the $1,500 ($10,000 realized gain x 15% capital gain tax rate) capital gains tax that would be generated. In addition, Jane will also receive a charitable deduction for the fair market value of the stock on the date donated. Let's say Jane is in the 25% federal tax bracket, this could ultimately result in an additional $5,000 of tax savings ($20,000 fair market value x 25% tax rate). Together, Jane would save a minimum of $6,500.
When considering a donation of stock instead of cash, it is very important to be mindful that the stock must be held for more than one year. Otherwise there is significantly different (and less beneficial) tax treatment.
For more information, please contact
Embrace Kids Foundation’s Chief Development Officer:
Glenn Jenkins - Glenn@EmbraceKids.org