By supporting Carey with appreciated stock/ETFs/mutual funds, you receive two benefits. First, you receive a charitable income-tax deduction for your donation, and, second, you avoid paying the capital-gains tax which would be required if you sold the stock yourself. If you have held the stock for more than 12 months, you can deduct the full fair-market value of the stock at the time of your gift, regardless of how much you paid for it.
Here is an example: You donate ten shares of VST worth $10,000 today which you purchased over a year ago for $5,000. If you sold them, you would pay capital gains tax, as well as California income tax on the difference between what you paid and today's value or $5,000. If you donate them to Carey, you get a tax deduction for $10,000, and Carey gets the full value of your gift.
This is often a great strategy for those who would like to "reset" basis on securities as well. In addition to receiving a deduction and avoiding a capital gain, individuals still interested in owning the gifted security can repurchase the same day to establish a new high watermark basis for their stock. You can repurchase ten shares of VST the same day you gift for $10,000 which will be your new cost basis for tax purposes. When selling VST in the future the tax liability will be meaningfully lower.
If your stock has depreciated, another option is to take the capital loss. You can sell the stock to realize the loss, take the tax deduction for that loss, and generate a charitable contribution deduction by donating the cash proceeds of the sale to The Carey School.
To make a gift of securities, please use our Stock Transfer Form.
For specific questions about tax benefits and advice, please consult with your tax advisor.
