If you've
invested in stocks - even a little - you've probably had to face an unhappy
reality: you usually must pay taxes on all stock profits. Fortunately, there's
a way to turn that bad news into great news for both you and a charitable
organization you care about, like Berry College. By gifting your appreciated
stock to a 501(c)(3) nonprofit, you will provide critical support and receive a
tax deduction for the fair market value of the donated shares.
In today's
issue of Ask the Expert, Yvonne Linker Hall (80C), a certified
financial planner, certified investment management analyst, and managing
partner and co-founder of Hall & Dornan Capital Partners Wealth Managers,
will share some helpful tips about gifting stocks. Yvonne has been a
professional financial advisor since 1993, providing her clients with
investment advice for wealth management and preservation. She holds a bachelor
of science degree in business administration from Berry College. Yvonne and her
team enjoy supporting organizations focused on creating a better world for
women, girls, and their families. She is a member of Berry's Planned Giving
Council.
Is donating stock a good option for making a
charitable gift?
Yes, gifting
appreciated stock can offer significant benefits for both the donor and the
receiving organization. As the donor, you would not have to pay capital gains
tax on the increased value of the stock. You could—if you itemize-- also be
eligible for a charitable tax deduction equal to the fair market value of the
stock which would reduce your taxable income and result in a tax savings. Also,
when you give stock, you may be able to make a larger contribution to your
favorite cause, furthering their mission and programs even more than if you had
given a cash gift.
I'm not wealthy, can I still donate stocks?
You don't have to be wealthy
to make a charitable impact. If you have charitable intent, you need to
consider a few questions before making a gift: How does my intent fit with my
overall financial plan? How much can I afford to give? What is the most effective
way to fulfill my philanthropic desire in the context of my overall financial
plan? What makes the most sense to give? What's the most advantageous way to
make the gift?
If you have the resources to
draw on to donate appreciate stock, you need to consider whether doing so
enhances your overall financial plan, estate plan, and cash flow needs in
retirement.
Wouldn't it
be better to sell the stock and donate the proceeds to charity?
No. If you sell your stock,
you will be liable for the tax on any gains. If you give the stock to a
nonprofit, they will get the full value of the asset, and you won't have to pay
taxes on it. The larger the unrealized gain is, the more significant the benefit
from donating the stock.
Are there
any guidelines regarding how long to keep stock before donating it?
You can give stock that
you've held for any period of time, but it is typically more beneficial to wait
until you've held the stock for a year or longer—both to give it time to grow
and to maximize any deduction available from the donation.
Is there a
limit to how much stock you can donate?
Yes. Simply speaking, you can
give up to 30% of your adjusted gross income, but if you are considering that
level of donation, you should consult with a tax professional.
What
information does the donor need to have available to make the transaction go
smoothly?
If you're planning to give a
gift to Berry, Helen Lansing, senior planned giving officer, will be your best
resource for this information, but in general you need the receiving
organization's account and transfer instructions as well as the specific stock,
number of shares, and which lots of stock you intend to donate. You will also
need to get a Donation Acknowledgement Letter from the charity to use for your
taxes.
Is there
ever a time when gifting stock doesn't make sense?
Yes, if you have a loss,
there's no benefit to donating the stock or if you will need the resources provided
by that stock asset for your own financial support. Otherwise, barring these
two things, using appreciated stock to make a charitable gift may make a lot of
sense.
How can I
donate stock?
Contact Helen Lansing at 706-378-2867 or hlansing@berry.edu and she will walk you
through it. The actual giving is a simple process, but it's important to work
with your financial advisor to work out the details so that you have the most
positive overall impact possible.
Investment advisory services offered through Raymond
James Financial Services Advisors Inc.
Hall & Dornan Capital Partners is not a
registered broker/dealer and is independent of Raymond James Financial
Services.
Raymond
James and its advisors do not offer tax advice. You should discuss any tax matters with the
appropriate professional.
