Gifts of Appreciated Securities
Smart gift planning combines charitable intent with cost-efficient planning techniques. Of critical importance is the kind of asset used to fund the gift. Usually, long-term appreciated property can generate the most favorable tax benefits. Reason: Gifts of such property provide a double benefit—a charitable deduction, in most cases, for the full fair-market value of the property—plus avoidance of any potential capital-gain tax.
The chart below illustrates the additional tax savings from a gift of appreciated assets.
|
|
|
Cash |
Appreciated Property |
|
A. |
Fair-Market Value |
$10,000 |
$10,000 |
|
B. |
Cost Basis |
10,000 |
4,000 |
|
C. |
Capital Gain |
0 |
6,000 |
|
D. |
Capital-Gain Tax (15%) |
0 |
900 |
|
E. |
Charitable Deduction |
10,000 |
10,000 |
|
F. |
Actual Tax Savings* (24%) |
2,400 |
2,400 |
|
G. |
Total Tax Savings (D+F) |
2,400 |
3,300 |
*The exact amount that can be claimed as a charitable deduction depends on two factors: the total amount of charitable gifts a donor makes in a given tax year (including the deduction described here) and the donor’s adjusted gross income.
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Kimberley S. Coppock, J.D. |
UAB Office of Planned Giving |
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