A gift of appreciated stock is a most advantageous form of giving for a donor. These benefits include:
- Eliminate capital gains taxes
- Qualify for an income tax deduction
- Still maintain control of the corporation if desired.
Those who own sizable blocks of stock in closely held corporations are strategically positioned to create unique planning benefits. A majority shareholder can take retained earnings out of the corporation, use them for a philanthropic purpose without having them taxed again, and still maintain a control position in the corporation’s outstanding stock.
For example, a shareholder gives some of his or her stock to a favorite organization (such as Jesuit), but not so much so as to reduce ownership to 50 percent or less. Jesuit can then sell the stock back to the corporation, which uses its retained earnings to purchase the shares. (Note: The IRS does not allow for a prearranged contract or agreement for the organization to sell the stock or for the corporation to buy it.)
Another example how gifts of stock can be advantageous: If you donate stock to Jesuit that was purchased for $2,000 and have owned 12 months or more, and the stock is now worth $10,000, your tax deduction will be for the full $10,000 and a tax savings of $3,100 (31% marginal bracket. In rate = $1,600) on the appreciation of the stock. Your total savings in this example is $4,700.
For more information on how you can donate securities to Jesuit High School, please contact Nick Suszynski '98 at (813) 877-5344, ext. 704.