Stocks and Charities

A way to Increase your tax deduction by donating stock to charity:

Have you ever wondered how you can make a bigger impact to your favorite charity and still reap the benefit of a large tax deduction?

Consider donating long‐term appreciated securities, including stock, bonds, and mutual funds, directly to charity. Giving appreciated stock you’ve held longer than a year is more beneficial than donating cash. If you donate a security that has increased in value since date of inception and is held longer than a year, along with itemizing deductions, you are able to take a charitable deduction for the stock’s fair market value on the day you give it away. You’ll also avoid capital gains taxes on in the increase in value. You can deduct the fair market value only if you have held the stock for more than a year and it has increased in value.

If donating stock is something that you would like to consider ask the charity and brokerage firm about the time frame
and procedures for giving the stock before year end. A letter of instruction or authorization to transfer the shares to
charity may be required.

A Larger Gift Means a Larger Deduction

Consider the example below of donating stock to your favorite charity with a Giving Account at TrustBank:

  • Original cost of securities: $100,000
  • Federal long‐term gains rate: 25%
  • Value of securities: $250,000
  • Long term capital gains tax paid if you sell your security and donate the proceeds: $37,500
  • Long term capital gains tax paid if donating security to your favorite charity: $0.00
  • Charitable contribution/your charitable deduction for selling your security and donating the proceeds: $212,500
  • Charitable contribution/your charitable deduction if you donate security to your favorite charity: $250,000
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