Donating Stocks and Securities
If you own stocks, bonds or mutual funds that have appreciated in value, you have a unique opportunity to realize extra tax savings by making an outright gift to the Colonial Crossroads Chapter of the American Red Cross.
By making this type of donation, you would earn a federal income tax deduction for the full fair market value of the securities as long as you have owned them for longer than one year. Additionally, you would avoid all of the capital gains tax that would be due on the sale of the securities.
Here's an example:
John Doe has committed to making a sizable gift to help the Colonial Crossroads Chapter of the American Red Cross. He owns $20,000 worth of stock that he purchased 10 years ago for $10,000. If John sold the stock, he would realize a capital gain of $10,000. Listed below are two ways of making his gift.
| Option A Give Stock Outright |
Option B Sell Stock and Give Cash |
|
| Gift Value | $20,000 | $20,000 |
| Ordinary Income Tax Savings (assuming 28% tax bracket) |
$5,600 | $5,600 |
| Capital gains tax saved or paid (assuming 15% tax rate) |
$1,500 SAVED | $1,500 PAID |
| Net Tax Savings | $7,100 | $4,100 |
By donating the stock directly, John would completely avoid all capital gains tax and would realize larger net tax savings.
For more information, please contact the Financial Development office at(908) 273-2076, extension 18.
