Taking Stock in Charity


A client of Stanislawski & Company recently called inquired about the tax implications of giving appreciated stock to their two children.  I recalled that in the past they had also always given over $20,000 to their favorite charities each year.  Stanislawski & Company advised them in the above scenario such that they, their children, and their favorite charities could multiply the benefits of these gifts.

Instead of writing a check to their favorite charities each year, I recommended that they take the stock (that they were going to give to their children) and instead give it to their charities.  The main advantage is by giving appreciated property such as stock to their charities, they were able to get a tax deduction on the fair market value of the asset, even though their original cost was significantly less!  I then recommended that they simply write a check to their children to complete their gift to the children.

If my client had done the reverse (given the stock to the children and written the check to the charities) the children probably would have been subject to a large capital gains tax because the parents' original cost basis in that stock carries over to their children.  With our recommendations, the charitable organization does not have a capital gains tax (they don’t pay any taxes) and the client was able to get a tax deduction for $20,000, the fair market value, where it originally only cost him $2,000 (stock cost).

This is just one example of how Stanislawski & Company’s service can add value.  Whether income taxes, monthly accounting, business management services, estate tax planning, or certified financial planning, we are always available to help you.  Call or email for more information regarding the above and how it might pertain to you or someone you know.

Doug Forbes