GIFTS OF APPRECIATED SECURITIES
With the stock market at record levels, it is a great time to make a gift of appreciated securities. If you have held stock, mutual funds or other securities for over one year and the value of those securities has risen, you may donate those appreciated securities to a charity like US. You will receive a double tax benefit: (1) avoidance of any capital gains tax that would be due if you were to sell the securities, and (2) if you itemize (see above), a tax deduction for the fair market value of those securities. Even if you do not itemize and are not able to deduct the amount of the gift, the capital gains tax will be avoided.DOWNLOAD INSTRUCTIONS FOR STOCK GIFT OPTIONS
Because the standard deduction has been increased, fewer donors will itemize and be able to take advantage of the charitable deduction. However, if you are close to the threshold for taking the standard deduction, you may be able to get a tax break for your donations by employing a strategy called bundling. To bundle gifts, you would make two or more years’ worth of donations in a single year so that the total of all your other deductible expenses will be enough to itemize that year. Then, you would skip donating for the next year and return to taking the standard deduction.
The concern with bundling is that, although this strategy will provide a tax break for you, it results in an inconsistent income stream to the charity. However, you might consider making a bundled donation to a donor-advised fund, deduct the entire amount of the gift in that year, and direct the donor-advised fund to make distributions to the charity over the next few years. In this way, you are able to take the charitable deduction and provide a consistent income stream to the charity. Of course, you may also make donations in “off” years while taking the standard deduction.
Donor Advised Funds may be set up through a variety of financial services organizations and community organizations. Be aware that certain rules and restrictions may apply, and fees may be assessed. However, DAFs are often flexible about accepting both cash and non-cash gifts and can be a great way to involve future generations in philanthropy.