Your GiftTree path: You're considering an outright gift made during your lifetime > You're holding stocks that have risen in value > You want to maximize your deduction but not affect your cash flow
The IRS still offers you a notable tax break for charitable gifts: you may deduct the full, fair market value of appreciated assets that you give us, and also avoid capital gains liability on the transfer. This means that you can leverage a larger donation if you use an appreciated asset to make your gift instead of cash.
The most common appreciated asset, and the easiest to donate, is marketable stocks and bonds. Here are some details about these gifts:
- How will your gift of stock be valued? It's the average of the high and low prices for the stock on the date of the transfer to us. If the high bid was $80 and the low was $70 on the day you made your gift, your deduction will be $75 per share.
- When is your gift complete? If your stock is held by your broker, it's the date the shares reach our account. If you hold the stock yourself and mail it to us, it's the postmark date on the envelope.
IMPORTANT! |
Don't sell the stock first! |
Even though you give us the proceeds as a gift, the IRS will impose capital gains tax on your sale, wiping out the benefits of this arrangement. |
What if your stock has declined in value? |
The fair-market deduction rule works against you: if you bought stock for $50,000 and it's now worth $30,000, your charitable deduction will be limited to $30,000. You won't earn a capital loss by making the transfer to us, either. It is better to sell depreciated stock, claim the resulting tax loss as one deduction, then make a deductible cash gift to Lawrenceville with the proceeds. |
- How should you transfer securities to us? If your broker holds the shares, he or she should call our office at (609) 620-6064 for transfer instructions. If you hold the shares yourself, mail them unendorsed, and in a separate envelope mail a stock power signed in blank for each stock certificate to:
The Lawrenceville School
Office of Planned Giving
2500 Main Street, Hogate Hall or
PO Box 6125
Lawrenceville, NJ 08648
(609) 620-6064 | Fax: (609) 895-2148
E-mail: scushmor@lawrenceville.org
- Can you deduct the full amount of your gift? Yes, within this limitation: the IRS says that you can deduct gifts of appreciated assets up to 30 percent of your adjusted gross income ("AGI" -- the figure at the bottom of the first page of Form 1040. See glossary for full definition). Thus, if your AGI will be $100,000 this year, you will be able to deduct up to $30,000 in gifts of stock. A gift in excess of the 30 percent amount is not wasted, however, because the IRS allows you to carry forward excess deductions through the five tax years following the year of your gift.
Note that the IRS allows cash gifts to be deducted up to 50 percent of adjusted gross income. Therefore, the deduction for a large gift of appreciated assets could take longer to claim than the deduction for the same gift made in cash. But if the donated assets had a small cost basis, they could still be more tax-efficient to use than cash.
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Example: |
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You own stock with a fair market value of $100,000 that you purchased for $30,000. If you contribute that stock to Lawrenceville you will claim a charitable income tax deduction for the full $100,000. In addition, you will not be liable for tax on the $70,000 capital gains upon transfer of the stock. By donating appreciated stock instead of cash, you have delivered $100,000 to us and secured a tax deduction in the same amount, at a cost to you of only $30,000. |
If you are considering a gift of appreciated securities, email us, complete the personal illustration form, or call us at (609) 620-6064 so that we can assist you through every step of the process.
The Lawrenceville School
Office of Planned Giving
2500 Main Street, Hogate Hall or
PO Box 6125
Lawrenceville, NJ 08648
(609) 620-6064 | Fax: (609) 895-2148
E-mail: scushmor@lawrenceville.org