Gifts of Appreciated Securities: Stocks, Bonds, Mutual Funds, and Other Assets
Appreciated stocks and bonds are the second most popular asset donated to Clarkson University. That's because they're simple gifts and can offer you a greater tax benefit than an equivalent in cash.
Using appreciated assets you have held for 12 months or longer entitles you to a charitable deduction for the fair-market value of the donated asset, and you can avoid paying capital-gain tax you would otherwise pay upon the sale of the appreciated securities. This tax deduction may be up to 30 percent of your adjusted gross income, and any amount over this limit may be carried forward for five years.
For example, Betty Goodwin invested $5,000 in a hot stock that has grown to a value of $10,000 in 16 months. When she made a direct gift of her shares of stock to charity, she entirely bypassed the capital-gain tax. Mrs. Goodwin receives an income-tax deduction for a gift of $10,000, which saves her $2,800 in taxes. (She, too, is in the 28 percent tax bracket.) In addition, she has also saved $750 in capital-gain tax, since her $5,000 profit from her appreciated stock would have been taxed at a 15 percent rate. It only cost Betty $6,450 to make her $10,000 donation.