Tax Benefits of Giving
Do you have appreciated investments you are planning to sell? Consider donating shares of stock, mutual funds, or bonds to the Culver City Education Foundation, and avoid paying capital gains tax. When you donate your investment directly to CCEF, you won't owe capital gains tax on the appreciated value. This is a great way to maximize your charitable giving before the end of the year.
As you evaluate your portfolio, you may be considering selling some of your appreciated investments. Donating stock directly to CCEF is one of the most tax-smart ways to maximize your gift.
Here are three reasons you may want to give stocks instead of cash:
- You get the exact same charitable deduction as you do by donating cash.
- By giving appreciated stocks, you ALSO eliminate the long term capital gains tax you would owe.
- Donating stocks is easy and hassle-free; it also helps you keep your portfolio balanced and in-line with your long-term goals.
If you find that you have securities that have declined in value and are interested in donating them, you may find it more advantageous to sell the securities first and contribute the proceeds as opposed to donating the securities outright. This strategy should allow you to claim a deduction for both the loss from the sale of the securities, as well as the charitable gift.
Gifts of appreciated securities could provide even greater tax or estate planning benefits to you through a charitable planned gift arrangement.
Donating stock can be a very tax-advantageous way to support Culver City students. The transfer process is simple. Email CCEF at [email protected] to make arrangements or to learn more.
Juanita purchased 100 shares of Amazon stock five years ago at $5 per share. This gives her a cost basis of $500 in the stock.
Amazon stock is now valued at $50 per share, so the total fair market value of her holdings is $5,000. Juanita plans to sell her stock and donate the net cash proceeds to CCEF. Assuming a 15% federal capital gains tax rate, if Juanita sold the stock she would realize appreciation of $4,500 and owe an estimated $675 in federal capital gains taxes.
After paying the federal capital gains taxes, Juanita’s estimated net cash available for charitable giving is $4,325.
However, if Juanita gifts her stock directly to CCEF, she can eliminate the capital gains taxes she owes while also potentially claiming a current year income tax deduction for the full fair market value of her stock ($5,000). By donating her stock, Juanita is able to give a higher amount to fund vital programs throughout CCUSD while also reducing her tax burden!