Stock Donation Options
Did You Know That You Can Give Appreciated Securities to St. Mary’s?
Donating long-term appreciated securities directly to St. Mary’s — rather than selling the assets and donating the cash proceeds — is one of the best and easiest ways to give more. By taking advantage of the applicable tax incentives, you can significantly increase the amount of funds available for your charitable giving. A donation of appreciated stock allows you to avoid capital gains on the appreciated value of the stock while receiving a charitable donation for the total value of the stock donated to St. Mary’s. It is a win-win for everyone!
Why donating stocks and other securities is one of the most tax-efficient ways to give.
A charitable contribution of long-term appreciated securities — i.e. stocks, bonds and/or mutual funds that have realized significant appreciation over time — is one of the most tax-efficient of all ways to give. This method of giving has become increasingly popular in recent years because of two key advantages:
- Any long-term appreciated securities with unrealized gains (meaning they were purchased over a year ago, and have a current value greater than their original cost) may be donated to charity and a tax deduction taken for the full fair market value of the securities — up to 30% of the donor’s adjusted gross income.
- Since the securities are donated rather than sold, capital gains taxes from selling the securities no longer apply. The more appreciation the securities have, the greater the tax savings will be.
A wrinkle here is that the deduction is limited to 30% of your adjusted gross income (AGI) instead of the usual 50% limit for donations of cash to charities, although you can still carry forward unused deductions for five years.
Should you donate cash or stock to St. Mary’s?
You can sell your stock and then donate what’s left over after you pay capital gains tax, or you can donate securities directly. But with the second option, you get a bigger deduction and St. Mary’s gets a bigger donation. Here’s an example of what the numbers might look like if you want to donate $10,000 worth of stock, assuming a cost basis of $5,000, a capital gains tax rate of 20%, Medicare tax rate of 3.8% and Virginia state tax of 5.5%.
|Option 1: Sell Stock and Donate
Net Proceeds to St. Mary’s
|Option 2: Donate Stock
to St. Mary’s Directly
|Current fair market value of securities||100 shares × $100 per share = $10,000||100 shares × $100 per share = $10,000|
|Long-term capital gains tax paid1||$1,465||$0|
|Amount donated to charity and tax deduction available to parishioner||$8,535||$10,000|
1 Assumes a cost basis of $5,000, that the investment has been held for more than a year, and that all realized gains are subject to a 20% long-term capital gains tax rate, Medicare tax of 3.8%, and 5.5% Virginia state tax.
Giving a gift of securities to St. Mary’s is easy
Simply identify the shares of the security (stock, bond, mutual fund, ETF) that you would like to give and provide your financial advisor/broker with St. Mary’s account name, number, and financial institution, which you can obtain by contacting St. Mary’s Finance Manger, Janet Tasker, 703-527-6800. Please be certain to advise St. Mary’s that your gift is forthcoming.
You may wish to consult your tax advisor before making a gift of appreciated securities.