Related Links

Appreciated Securities

Complete Gift Description

Give appreciated securities to the MU Foundation and you shall receive – a tax break. Whether it's 100 shares of blue-chip stock or a new high-tech gadget, our government does indeed allow you to deduct these gifts as charitable donations. Moreover, you also avoid capital gains tax on the transfer.

This double benefit means that you can leverage a larger donation by using appreciated securities rather than cash to make your gift. Here's how it works:

Assumptions: Donor in 33% Income Tax bracket; Capital Gains Tax rate 15%

$10,000
Cash

$10,000
Stock
Cost Basis $5,000

$15,000
Stock
Cost Basis $7,500

Charitable Deduction

$10,000

$10,000

$10,000

Tax Savings @ 33%

$3,300

$3,300

$4,950

Capital Gains Tax Saved

$0

$750

$1,125

Net Cost of Gift

$6,700

$5,950

$8,925


This sounds good! With the market fluctuating daily, though, how will you value my stock?

The most common appreciated asset, and the easiest to donate, is marketable stocks and bonds. Your gift will be valued by averaging the high and low prices for the stock on the date of the transfer to us. If the high bid was $80 and the low was $70 on the day you made your gift, your deduction will be $75 per share. If your stock is held by your broker, the date of transfer is the day the shares reach our account. If you hold the certificates yourself and mail them to us, the day of transfer is the postmark date on the envelope.

Can I deduct the full amount of my gift?

Yes, within this limitation: the IRS says that you can deduct gifts of appreciated assets up to 30% of your adjusted gross income ("AGI" is – the figure at the bottom of the first page of Form 1040). Thus, if your AGI will be $100,000 this year, you will be able to deduct up to $30,000 in gifts of stock. However, a gift in excess of the 30% amount is not wasted because the IRS allows you to carry forward excess deductions through the five tax years following the year of your gift.

I have appreciated stock that pays me a dividend, albeit pretty small; if I donate it, I’ll lose the little income it provides. But, if I sell it, I’ll have to pay capital gains. Is there a solution?

There is. A number of plans allow you to make gifts while retaining a fixed or variable income for life or a specified period of time. Through the use of such plans, it can be possible for appreciated securities to be sold and reinvested with reduced or eliminated capital gains tax. The entire value of the contributed asset is then available to experience greater earnings than you might otherwise achieve. We call these plans life income arrangements.

Is it difficult to transfer securities?

Not at all. If your broker holds the shares, he or she should call our office at (304) 696-6214 for transfer instructions. If you hold the shares yourself, use two envelopes. In the first envelope, place the unendorsed certificates. Then, in a separate envelope mail a signed stock power for each stock certificate. Stock powers may be obtained from your bank or brokerage house. Please use certified mail.