Rethinking Cash

Did you know you can leverage the full value of appreciated assets (owned for more than a year) for gospel purposes instead of what is left over after taxes? 

Appreciated assets come in many shapes and sizes, such as stocks, mutual funds, bonds, real estate, business interests and mineral rights. Instead of liquidating these assets and gifting the proceeds, consider gifting them directly. This allows you to receive a charitable deduction for the full market value up to 30% of your overall adjusted gross income for the year and bypass a possible 23.8% in capital gains tax. Suppose you purchased $20,000 of stock a few years ago, and today those shares are worth $100,000. You are in the 37% federal income tax bracket and have a capi­tal gains tax rate of 20% plus the Medi­care surtax of 3.8%. Compare gifting the stock directly to the IMB versus selling the stock and gifting the proceeds.

Gift ProceedsGift Directly
Current value of stock$100,000$100,000
Cost basis to purchase stock$20,000$20,000
Capital gains + surtax of 23.8% on $80k gain$19,040$0
Gift to IMB after taxes$80,960$100,000
Your charitable deduction$29,955$37,000

Gifting appreciated assets instead of cash is a powerful tool because it eliminates capital gains taxes, creates a larger chari­table deduction, and enables you to make a greater gift to support missions. 

Combine it with other strategies to achieve even more. For example, save tax­es and achieve charitable goals by gifting a portion of a business interest or real estate before a planned sale. Rebalance your investment portfolio by gifting se­curities that have appreciated more than others. If you have increased income this year, offset it by gifting appreciated assets to a donor advised fund. There are even strategies that will pay a stream of income from the appreciated assets you gift.

With the substantial increase in stock and real estate values in recent years, now is a great time to review your portfolio with an expert to identify tax-advantaged giving options.