Although the stock market has its ups and downs, some individuals will hold stocks for long periods of time. These stocks may have significantly increased in value. Direct gifts of appreciated stock and mutual funds are relatively simple and can provide benefits to the benefactor that cash gifts may not provide.
Donating appreciated securities to the Missionaries of the Holy Family has two types of tax benefits:
- A charitable deduction for the present fair market value of the stock.
- No tax on the value of the stock’s appreciation.
Example: John wants to donate stocks that have appreciated. The stocks are now worth $10,000 but they cost him only $5,000. John is entitled to a charitable deduction of the full $10,000, and he will not pay any taxes on the $5,000 appreciation.
With stock that has appreciated in value, the donor must give/transfer the stock directly to the Missionaries of the Holy Family to realize these benefits. If the donor sells the stock and subsequently gives the proceeds to charity, the donor will be responsible for paying a capital gains tax on the profit. To transfer stock, please call our Advancement Office at (314) 577-6300.
Depreciated Stock
With stock that has depreciated in value (i.e., stock whose value is less than its original cost), the optimal charitable gift process is reversed. The donor should sell the stock first and then donate the proceeds. This way, the donor can derive the income tax benefit of the capital loss.
Regarding gifts of stock, always consult your personal tax advisor and review important tax disclosures.
IRS Circular 230:
In compliance with the requirements imposed by the IRS pursuant to Circular 230, we inform you that (i) any written tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code; (ii) this communication was written to support the promotion or marketing of the transactions or matters addressed herein; and (iii) a taxpayer should seek advice based on the taxpayer‘s particular circumstances from an independent tax advisor.