Likely because of our current economy, we have had an increasing number of requests to make stock donations to churches. Here is a great write-up that will help understand the benefits of this type of donation.

Click here for our stock donation form 


Why Give Appreciated Stock Instead of Cash?


When you donate stock that you have held for more than one year directly to a church or public charity, you receive two major tax advantages:

  1. You receive a charitable deduction for the full fair market value of the stock

  2. You avoid paying capital gains tax on the appreciation

Because churches are tax-exempt, they can sell the stock immediately and receive the full value without paying any tax.

For many donors, the long-term capital gains tax rate is 23.8% (20% capital gains + 3.8% net investment tax). By donating stock instead of selling it first, you avoid ever paying this tax.


Example: Selling First vs Donating Stock



Sell First

Give Stock

Market Value

$15,000

$15,000

Cost Basis

($5,000)

($5,000)

Gain

$10,000

$10,000

Capital Gains Tax (23.8%)

$2,380

$0

Amount Church Receives

$12,620

$15,000

Your Charitable Deduction

$12,620

$15,000


Result:

The church receives $2,380 more and you receive a larger tax deduction simply by transferring the stock instead of selling it first.


Deduction Limits:

Gifts of appreciated stock to a public charity are deductible up to 30% of your Adjusted Gross Income in the current year. Any excess deduction can be carried forward for up to five additional years.


The Key Insight:

When you give appreciated stock, you are donating money you never paid taxes on.