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GIFTS OF APPRECIATED SECURITIES: STOCKS, BONDS, MUTUAL FUNDS, AND OTHER ASSETS
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.
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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 (28%) |
2,800 |
2,800 |
| G. |
Total Tax Savings (D+F) |
2,800 |
3,700 |
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