Consider donating stock instead of cash to charityLarry Olivarez Jr.Giving to charity is an important financial priority for many people. Most often this takes the form of donating cash or material goods to a favorite nonprofit. A less common strategy – but one that may be worth considering – is to give the gift of appreciated stock. When managed correctly, donating appreciated stock can be beneficial for the charity and the donor, allowing the donor to make a larger gift while potentially claiming a higher tax deduction. How it works Generally speaking, a contribution to a qualified charity allows you to claim a tax deduction if you itemize deductions. (See IRS Publication 526, Charitable Contributions for additional information.) When a stock has increased in value over time and you intend to make a donation with the proceeds, you can approach it in two ways as illustrated by this example: A married couple holds a stock valued at $10,000. The stock was purchased five years earlier for $5,000. The couple would like to liquidate the stock as a way to make a substantial gift to a local charity. They can either:
Other considerations If you have appreciated assets that might be appropriate to donate to charity, here are other factors to consider: • The stock must be held for more than one year to qualify as capital gain property for the scenarios listed above. • The maximum amount you can deduct in a given year is limited to 30 percent of your adjusted gross income (known as AGI, or your total gross income minus specific deductions), because it is appreciated capital gain property3. However, you can carry forward unused deductions for five years. You do have an option of deducting only the cost basis (purchase price adjusted for stock splits, dividends and return of capital distributions) of the security, which would raise your deductible limit to 50 percent of your AGI. • The total deductions you can claim in a year may be reduced if your income exceeds certain levels. • Consult with your tax advisor to make sure your gift is handled properly in order to claim your tax deduction. Additionally, talk to your financial professional to see how you can make donations that are aligned with your financial goals. 1 Assumes ordinary tax bracket of between 25-35 percent. 2 Deductions for charitable contributions may be limited based on the type of property donated, type of charity and the donor’s AGI. 3 Other limitations to the amount you can deduct in a given year may apply. ### Larry Olivarez, Jr. CEP®, CRPC®, is a Private Wealth Advisor with Ameriprise Financial Services, Inc. in Corpus Christi, Alice, and surrounding areas of South Texas. He specializes in fee-based financial planning and asset management strategies and has been in practice for 13 years. To contact him please call 361.654.1900 in the Corpus Christi office located at 711 N Caranchua Suite #1701 or 361.668.1212 in the Alice office located at 604 E. Second St. Email: larry.x.olivarez@ampf.com Website: ameripriseadvisors.com/larry.x.olivarez/ Investment advisory products and services are made available through Ameriprise Financial Services, Inc., a registered investment adviser. Neither Ameriprise Financial nor its affiliates or representatives may provide tax or legal advice. Consult your tax advisor or attorney regarding specific tax issues. | |
2016 Alice Business Today - June 2016 |