By Van C. Durrer II
No, this column is not about the latest, greatest recipe for a gluten-free confection. Rather, we wanted to highlight a powerful tool to maximize the impact of your donations. Under the Internal Revenue Code, when you donate capital gain property which has appreciated in value, you may take a charitable deduction for the full value, without being subject to any capital gains tax for the appreciation. Capital gain property is generally capital property held for more than one year.
Take this example: say you purchased 10 shares of stock in Facebook, Inc. last summer for around $23 per share, or $230. Those same shares today are worth over $650. If you sold those shares, you would have capital gains of $420. However, if you donate those shares to a qualifying charity, you can deduct the full $650 value and never pay tax on the $420 gain. In other words, you will receive a deduction of $420 for property that you only paid $230 to purchase – or, you get to have your cake and eat it too.
This feature of US tax law is available for any capital property that can be donated. Because everyone’s situation is different, you should consult a tax advisor.
For more information, consult Publication 526
Consult your broker for information on their programs.