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Charitable Giving Tip That Could Save You Thousands

  • 22 October 2013
  • Author: ellice909
  • Number of views: 3935
Charitable Giving Tip That Could Save You Thousands

Have your long-held stocks made a good recovery this year? If so, they could hold the key to saving you thousands in taxes when it comes to charitable giving. If you’re a sole proprietor or own a business with another type of flow-through entity like an LLP, LLC or S-Corp, giving appreciated stock as a gift could be the best way to give, and receive, this year.

Giving appreciated stocks to charity this year is a worthy consideration because the tax deductions on stocks held for more than a year are based on fair market value. The gain on the stock is not taken into consideration. Therefore, you have the opportunity to essentially “double” your tax benefit: a deduction for charitable giving, plus tax avoidance on the gain based upon the stock’s appreciated value. Not only can this benefit you, but it can also translate into a potentially larger tax-free donation to your favorite charity. Giving land and other property may hold similar tax advantages, but certain restrictions could apply, like a requirement to reduce the fair market value in some cases.

Remember as you look to identify giving opportunities within your financial portfolio that several types of investments qualify. The American Red Cross San Antonio Area Chapter mentions mutual funds as a great vehicle for charitable giving, while Habitat for Humanity of San Antonio recommends you consider donating your (perhaps otherwise forgotten) bonds. And a word of advice from Susan G. Komen San Antonio: Additional savings may be incurred when you choose to avoid a brokerage fee and transfer the securities directly to the charity.

Before making your contribution, however, be sure you and the charity qualify and that your contribution does not trigger an alternative minimum tax. This can be tricky, so we can help you make this determination.

Image credit: pogonici / 123RF Stock Photo


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