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Case Study
The following is an illustration of how this type of donation works.
Fred, 64, bought stock many years ago for $20,000 that is now worth $50,000. It pays a dividend of only 2 percent, amounting to $1,000 a year. His federal income tax bracket is 28 percent.
An OK Option
Fred is unhappy with the small dividend he's getting, but if he sells the stock, he must pay a tax of 15 percent on the $30,000 gain. This means Fred would lose $4,500 in taxes, leaving him a net amount of only $45,500 to reinvest in some other investment that pays him income.
A pooled income fund offers you major investment advantages that can't be achieved by yourself: It lessens the chore of managing your own money and assures you professional management for greater security.
A Better Charitable Solution
While that looks pretty good, Fred learns he can do a lot better by making a pooled income fund gift. He contributes his $50,000 worth of stock to a pooled income fund, which is yielding 2.8 percent. Because the fund pays no tax on long-term capital gains, the entire $50,000 is available to generate income for him. Already he has increased his annual income from $1,000 to $1,400 ($50,000 x .028).
Plus, Fred will receive an income tax charitable deduction of $30,944 in the year of his gift, saving him $8,664 of income tax (28 percent of $30,944).
In addition, Fred has the satisfaction of knowing that after his lifetime, his gift will benefit a cause he deeply believes in.
Learn How You Can Help
To discuss the good your pooled income fund gift could accomplish at the Zoological Society of San Diego, please contact the Office of Planned Giving at (619) 744-3352 or donations@sandiegozoo.org.
Your Next Steps
Getting Started | Is This Gift Right for You? | Case Study | How to Complete Your Gift | Action Items
Getting Started | Is This Gift Right for You? | Case Study | How to Complete Your Gift | Action Items
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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.
