Gifts of Appreciated Securities

Gifts of appreciated securities include stocks, bonds, mutual funds and other assets. Smart gift planning combines charitable intent with cost-efficient planning techniques. Of critical importance is the kind of asset used to fund the gift. Usually, long-term appreciated property can generate the most favorable tax benefits. Reason: Gifts of such property provide a double benefit*—a charitable deduction, in most cases, for the full fair-market value of the property—plus avoidance of any potential capital-gain tax.

The chart below illustrates the additional tax savings from a gift of appreciated assets.

CashAppreciated Property
Fair-Market Value10,00010,000
Cost Basis10,0004,000
Capital Gain06,000
Capital-Gain Tax (15%)0900
Charitable Deduction10,00010,000
Actual Tax Savings (28%)2,8002,800
Total Tax Savings (D+F)2,8003,700

* For certain high-income taxpayers (singles above $200,000 and marrieds above $250,000) additional savings may be realized by the avoidance of the 3.8% health care surtax on investment income.