By Buster Wiand, CFC Board Member
Family Wealth Advisor for GFS Private Wealth, LLC
Charitable giving can be a powerful and rewarding experience for both the donor and recipient. If you are considering making a charitable contribution to the Clearwater Free Clinic this year, we first want to thank you for your consideration. We also want to make sure you are aware of the positive impact that donating appreciated stock can have on your overall charitable strategy. It remains one of the most effective and simple means of tax savings available under today’s tax law.
Let’s evaluate the advantage of gifting appreciated securities to the Clearwater Free Clinic in lieu of making cash contributions. Explained further:
- Any appreciated securities with unrealized long-term gains (meaning they were purchased over a year ago, and have a current value greater than their original cost) may be donated to the Clearwater Free Clinic, and a tax deduction may be 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, the usual tax on capital gains no longer applies. The more appreciation the securities have, the greater the tax savings will be.
The chart below compares the tax implications of three different methods of making donations. (1) Donating appreciated stock, (2) donating cash, and (3) selling securities and donating the cash proceeds. Let’s assume that the appreciated securities were purchased 3 years ago for $2,000 and are now worth $10,000 and AGI of $100,000.
As you can see, the combined tax savings of the deduction against AGI and capital gains avoidance are greatest when donating appreciated securities. In addition to appreciated securities, the IRS allows the same treatment for capital assets, which it defines as “most items of property you own and use for personal purposes or investment. Examples include stocks, bonds, jewelry, coin or stamp collections, and cars or furniture used for personal purposes.” www.IRS.gov
The Clearwater Free Clinic is able to receive gifted securities and the process is very convenient. We advise that you speak with your tax preparer or wealth advisor if you have specific questions about your contributions. If you have general questions or would like to discuss further, please contact: Buster Wiand 727-614-4333 or to make a donation to the CFC contact Meg Lokey 727-331-8149.