Why give stock?
There are significant tax advantages in giving appreciated stock held for more than one year. The donor may take the full fair market value of the stock gift as a charitable deduction on his or her income taxes and neither the donor nor the church has to pay the long-term capital gains tax, which is 15% of the net appreciation of the stock.
The maximum deduction you may take within a given tax year is 30 percent of your adjusted gross income. If you are unable to take the entire deduction in one year, you may carry the excess deduction forward for five additional years. The long-term capital gains tax rate is reduced to 5% for those in the 10 percent tax bracket.
Illustration between 1) selling appreciated stock first and then giving the proceeds and 2) giving appreciated stock outright:
|Sell First||Giving Stock|
|Hypothetical Cost Basis||($5,000)||($5,000)|
|Capital Gains Tax (Assuming 15%)||$1,500||$0.00|
|After Tax Proceeds to Church||$13,500||$15,000|
|Donor’s Charitable Deductions||$13,500||$15,000|
How to Give Stock