Why giving appreciated assets is better than giving cash!
Although cash seems to be the easiest way to give, it may not yield the best benefits for you! You can instead, increase the benefit of your gift by giving appreciated stocks, bonds, mutual fund shares or other appreciated property. You can receive a income tax charitable deduction for the full, fair market value of the securities, and not for the lower dollar amount you originally paid for them. In addition, you pay no capital gains tax on any appreciation that took place. Buy low and give high. It's a great way to share your appreciation with TCH!
EXAMPLE
What are the comparative benefits of giving $10,000 in XYZ stock purchased in 2004 for $2,000 (i.e. it has an $8,000 capital gain) vs. $10,000 in cash?
Cash Gift Stock Gift
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Gift Value $10,000 $10,000
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Capital Gains Tax Savings (15% rate) $0 ($1,200)
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Income Tax Savings (assume 34% rate) ($3,400) ($3,400)
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Cost of Gift to You $6,600 $5,400
Please note: This example is for illustrative purposes only and are not intended as legal or tax advice. Consult your own legal and tax advisors prior to making any material decisions based on this data.
