End of Year Gifts & Tax Planning

11/18/2016

W‌ith the end of the year approaching, a charitable gift can help you support your favorite United Methodist ministry and receive welcomed tax benefits.

In 2016, Jim and Sharon sold a portion of the stock that Sharon had inherited from her grandmother years ago. The stock had increased in value, and their CPA informed them that they had a capital gain of nearly $120,000. Their CPA reminded them that if they made a gift of this stock before the end of the calendar year, they would receive a charitable income tax deduction on the gifted shares. This deduction would help offset the capital gains tax on the stock they sold. They had always planned on making a gift to their church’s endowment fund, and this seemed like a great time to make the gift.

Gifting vs. selling stock

Jim and Sharon were still holding $80,000 in the same highly appreciated stock and did not intend to sell, primarily because of the substantial capital gains tax they already faced. A gift of the stock at year end would help lower their taxes this year.

By giving the $80,000 in stock, they received two benefits. First, they avoided a large capital gains tax on the stock. Second, they received a charitable income tax deduction. The deduction offset the capital gains from their prior stock sale of $120,000.

They are very pleased with the double benefits of their gift and are delighted that they have been able to make a nice charitable contribution to their church’s endowment fund.

If you would like to learn more about end of year charitable gift planning, please contact David Battles, CPA, at 800-259-6863 or dbattles@okumf.org.

 

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