Consider Donating Appreciated Stock at the End of the Year
For those invested in the stock market, 2019 was an unprecedented year with significant returns. If your portfolio has prospered, you may want to consider making some of your year-end gifts with appreciated stock.
You can achieve a greater impact by donating long-term appreciated securities. Compared to donating cash, or selling your appreciated securities and contributing the after-tax proceeds, you may be able to automatically increase your gift value and increase your tax deduction.
How does it work?
It's simple and easy.
Consider what stock has grown in value since you bought it.
Appreciated stock that is contributed to an ACF fund is exempt from capital gains taxes. If you sold the stock and used the proceeds to write a check for your gift, you would potentially be liable for capital gains tax. When you claim a charitable tax deduction for your gift, the full fair market value of the appreciated stock on the transfer date is your gift amount.
An illustration of the value you would realize if you donated your appreciated stock to ACF appears below. (Note: to bypass long-term capital gains, you need to have owned the stock you select for gifting at least 366 days)
Original cost of the stock:
Potential federal long-term capital gains rate:
Current value of the stock:
|Sell stock and donate proceeds
||Donate stock to ACF
|Long-Term Capital Gains Tax
Additional amount dedicated to the nonprofit organization is $20,000 (the value of the capital gains tax).
The value to you is a higher tax deduction and a greater charitable gift.
What should I do to take advantage of this opportunity?
- Contact your broker. Every brokerage firm has a slightly different requirement. Make sure you check their end-of-year deadlines to make sure your gift transfers before the end of December.
- Notify ACF so we are aware of the pending transfer and identify where the funds should be directed. Due to the electronic transfer of funds, ACF may not receive the details to apply the transfer into your fund. If you already have a fund at the Arizona Community Foundation, contact your relationship manager who will provide you with a stock transfer instructions document to share with your broker. If you do not have a fund, contact the ACF Philanthropic Services Team at 602.381.1400. They will provide you with information on setting up a fund at ACF.
Note: This information is for educational purposes only and is not intended to be legal or financial advice. Please contact your own professional advisor for individual financial and legal advice.