Gifts of Appreciated Stock
The gift of an asset - often common stock or mutual fund shares – is a valuable way to make a contribution to Boys & Girls Clubs and receive tax benefits based on the value of the asset(s). Appreciated assets have a higher market value than their basis or tax purpose value (in most cases, their cost). If sold by an individual at a price higher than their basis, such assets would potentially generate a taxable capital gain (either long-term or short-term depending on the holding period).
If you transfer the appreciated asset to Boys & Girls Clubs, you can receive a charitable tax deduction based on the current market value of the gift and avoid tax on any capital gains. Boys & Girls Clubs can then sell the asset for the full market value and, as a nonprofit, does not have to pay tax on any capital gains.
While appreciated assets often involve gifts of stock, other marketable assets - such as land, antiques, and homes – can be utilized as potential gifts with the possibility of valuable tax benefits. However, these other assets are reviewed on a case-by-case basis. For more information about gifts of appreciated assets, please contact your local Club so we can respond to your specific needs.
Learn how a gift of appreciated stock worked for Richard and Terri.
Suppose Richard and Terri had 300 shares of XYZ Corporation that they purchased at $15 a share some years ago. The current value in today's market is $36 a share. If they sold the stock themselves, they would have a taxable, long-term capital gain on the difference between their cost and what they would receive from the sale ($36 minus $15 = $21 capital gain per share. 300 shares X $21.00 = $6,300 in capital gains).
Richard and Terri could sell the stock, pay the tax on the capital gain, and either keep or donate the proceeds. If, however, instead of selling the stock, they gave the 300 shares to Boys & Girls Clubs, they would not incur any capital gains and would be able to deduct the current value (300 shares X $36 = $10,800) as a charitable gift. By donating the stock, Boys & Girls Clubs receives more than it would receive if Richard and Terri first sold the stock and then donated the proceeds after deducting the capital gain taxes. Also, Richard and Terri receive a greater tax deduction by giving the stock directly to Boys & Girls Clubs and avoiding the capital gain tax.
Suppose Richard and Terri had 300 shares of XYZ Corporation that they purchased at $15 a share some years ago. The current value in today's market is $36 a share. If they sold the stock themselves, they would have a taxable, long-term capital gain on the difference between their cost and what they would receive from the sale ($36 minus $15 = $21 capital gain per share. 300 shares X $21.00 = $6,300 in capital gains).