Gifts of marketable stocks, bonds, or mutual fund shares may be the best way for you to make a gift to Regina. Stocks, which have appreciated in value, can be given outright, usually for a larger tax savings than an equivalent cash gift would bring. Stocks, which have lost value, can be sold by the owner, who claims the capital loss and takes the gift deduction. Your gift of appreciated securities makes it possible for you to give more to the school at no greater cost to you.
The Power of a Gift of Stock
If you have securities that have increased in value since their purchase, you might want to consider using these assets to fund your charitable gifts. Then use the cash that you would have used for your charitable gifts to replace the stock with a new cost basis. The table below is based on stock worth $10,000 today and at a $2,500 cost basis. If sold, the stock would generate a $7,500 capital gain.
| Option A Give $10,000 in Cash |
Option B Sell Securities & Give Cash |
Option C Give Securities Outright |
|
| Gift Value | $10,000 | $10,000 | $10,000 |
| Ordinary income tax savings |
$3,960 | $3,960 | $3,960 |
| Capital Gains and MCT tax saved or paid, assuming 20% tax rate** |
N/A | $1,785 paid |
$1,785 saved |
| Net tax savings |
$3,960 | $2,175 | $5,745 |
**Total of 20% capital gains tax and 3.8% Medicare contributions tax (MCT). Additional state taxes may apply as well.
By giving securities, cash is preserved, current income tax savings generated, and the donor is relieved of capital gains and other tax that would have been due on a sale, all while making a significant charitable gift! Now the donor can use the cash to replace the stock with a cost basis equal to today’s value.
