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.
| Cash | Appreciated Property | |
|---|---|---|
| Fair-Market Value | 10,000 | 10,000 |
| Cost Basis | 10,000 | 4,000 |
| Capital Gain | 0 | 6,000 |
| Capital-Gain Tax (15%) | 0 | 900 |
| Charitable Deduction | 10,000 | 10,000 |
| Actual Tax Savings (28%) | 2,800 | 2,800 |
| Total Tax Savings (D+F) | 2,800 | 3,700 |
