CCIM Feature

Donation of Stock to Charitable Organizations

As the year-end approaches, many individuals are making decisions on final charitable contributions. In recent years, the donation of appreciated securities has become a more popular option for donors. Gifting long-term appreciated securities from taxable accounts held more than one year, rather than selling the securities and then donating the cash proceeds, provides tax incentives to the donor and more funds for charitable giving.

Long-term appreciated securities with unrealized gain, such as stocks, bonds, and mutual funds, can be donated to qualified charities approved by the Internal Revenue Service. A tax deduction is available for the full fair market value, up to 30 percent of the donor’s adjusted gross income. Capital gains taxes from selling the securities do not apply nor does the charity have to pay capital gains taxes when the securities are sold.

If the donation is greater than 30 percent of the donor’s adjusted gross income, the donor may be able to carry forward excess amounts for up to five years. This deduction is reflected on Schedule A of Form 1040 as an itemized deduction.

Crucial Timing

If a donation of appreciated securities is made near the end of the year, certain delivery rules in timing the donation apply. This is important to keep in mind so that the donation can be included within the tax year desired.

If a properly endorsed stock certificate is unconditionally delivered or mailed to the charity, the donation is considered completed on the date of delivery or mailing.

If the stock certificate is processed through a bank, broker, or its corporation, the donation is not complete until the stock is transferred to the charity on the corporation’s books. This may take several weeks -- which is why delivery and timing can be so critical in this process. It’s wise to check on the timing of processing a transfer to make certain that the deduction will be available for use in the year desired.

This issue also applies to any mutual funds a donor may wish to contribute to a charitable organization. Therefore, if the donation involves mutual funds, contact the fund company to ensure that the transfer to the charitable organization can be completed by the end of the year.

The impact on a donor’s tax return may be substantial, so it’s always beneficial for a donor to consult with a tax adviser in the final stages of planning sizeable charitable contributions.

If interested in donating to the CCIM Foundation, go to www.ccimef.org for more information.

Mary Stark-Hood, JD, CFP, is president of the Hood Group, Inc., which provides consulting services to business organizations and foundations. She serves as a consultant to the CCIM Foundation. Contact her at maryshood@comcast.net.

Mary Stark-Hood, JD, CFP

Mary Stark-Hood, JD, CFP, is president of the Hood Group, Inc., and serves as a consultant to the CCIM Foundation. Contact her at maryshood@comcast.net

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