Gifts of Securities: Getting Started
Copyright © The Stelter Company, All rights reserved. The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.
Did you know?
Stocks are considered to be appreciated for tax purposes if they're worth more now than when you purchased them.
How It Works
As stock prices increase, so do the taxes you owe on the long-term capital gain, which are charged at a maximum rate of 20 percent (0 percent if your income falls below the 25 percent tax bracket and 15 percent if your income falls below the 39.6 percent bracket). But when you donate publicly traded stock you've owned for more than one year to a qualified charitable organization such as The Foundations, you enjoy two major tax benefits:
The income tax deduction for long-term capital gain property is limited to 30 percent of your adjusted gross income in the year you make the gift, but your excess deduction is deductible for up to five additional years.
Learn how to transfer stock to The Foundations of Hawai'i Pacific Health.
Example
Lucy wants to make a charitable gift of $10,000. She can make her gift with either cash or stock. She has a marginal federal income tax rate of 28 percent and is not subject to state or local income taxes. The stock's value is $10,000, with a cost basis of $4,000.
Value of gift
$10,000
$10,000
Cost basis
N/A
$4,000
Long-term capital gain if sold
N/A
$6,000
Long-term capital gains tax eliminated ($6,000 x 15% rate)
N/A
$900
Income tax savings ($10,000 x 28% rate)
$2,800
$2,800
Total tax savings (capital gains tax eliminated + income tax savings)
$2,800
$3,700
Net cost of gift (value of gift - total tax savings)
$7,200
$6,300
In this example, using the stock instead of writing a check saves an added $900. A higher federal tax bracket and any state or local income taxes would further improve Lucy's results.
Learn More
A tax or legal advisor can provide you with additional information. We would be happy to assist you as well. Simply contact Jeff Pederson at 808-535-7134 or jeff.pederson@kapiolani.org; we can work with you to find a way to give that meets your goals.
Getting Started | Is This Gift Right for You? | Case Study | How to Complete Your Gift | Action Items
Jeff Pederson
Director of Planned Giving
Phone: 808-535-7134
Fax: 808-535-7111
E-mail: jeff.pederson@kapiolani.org
