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Overlooked Charitable Giving Option Offers Larger Tax Savings than Cash Gifts
The tax benefits of making a charitable gift with cash are well known, but donors can realize an even larger tax savings when they donate long-term, appreciated securities to VNA Care Network & Hospice.
"The extra tax savings come from avoiding the capital gains tax while still being able to deduct the full fair market value of stocks, bonds, mutual funds, and other securities," said Susan Young, director of fund development for VNA Care Network & Hospice. "Donors can use the cash they would have donated to purchase stocks, of the same company or a different one, and the purchase price will be the new cost basis."
For example, Judy M. wants to support her local visiting nurses by donating $10,000 to VNA Care Network & Hospice. She is in the 28% tax bracket. If she gave cash, she would realize a tax savings of $2,800.
Judy also has appreciated stock (held for at least one year) with a fair market value of $10,000. She purchased this stock several years ago for $4,000, the cost basis for the stocks. If she sold this stock, she would be taxed 15% on the capital gain of $6,000, owing $900 to the government.
Judy could instead transfer the $10,000 in stocks to VNA Care Network & Hospice rather than giving cash. Not only would she still receive the same $2,800 tax savings as the cash gift, but she would not pay the $900 capital gains tax. That would give Judy a total tax savings of $3,700.
If she wanted, she could then take the original $10,000 cash she was going to donate and reinvest in the stock market. The purchase price would be the new cost basis for the stock.
For more information and transfer instructions, contact Susan Young at 888-663-3688, ext. 1370 or syoung@vnacarenetwork.org.
This information is intended for educational purposes only. For legal, tax, or financial advice, please contact your professional advisors.