Tax Benefits of a Stock Gift
The tax benefits of a gift of stock or appreciated securities
Gifts of appreciated securities, both publicly traded and closely held, can often provide more advantages to a donor than a gift of cash. If you hold appreciated stock and want to use it as a means for supporting Norwich, do not sell it. Instead, you can give the securities to Norwich to avoid paying capital gains tax. In fact, if you sell the appreciated asset, you will become liable for a capital gains tax on the difference between what you paid for the asset and its current value, even if you donate the proceeds.
A gift of stock avoids capital gains tax on the stock and results in the maximum charitable deduction allowed. The fair market value of this gift (the average of the high and low value of the stock on the date it is considered by the IRS to be received by the University) is deductible in a given tax year up to 30% of a donor’s adjusted gross income or up to 50% of a donor’s adjusted gross income if the cost basis of the asset is used instead of the fair market value. The 50% election may be most advisable when a donor has unusually high income. Only gifts of stock held for more than one year should be considered for transfer in order for the donor to realize the maximum tax benefit.
Stock which has declined in value should be sold first and then the proceeds given as a gift to Norwich, so that the donor can claim the loss and the charitable deduction as allowable for tax purposes.
Your financial advisor can assist you in determining the tax benefits of your gift to Norwich, or contact Priscilla Gilbert, Director of Planned Giving, at 802.485.2301 or email pgilbert@norwich.edu.
