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. The reason is that 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-gains tax.

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

CashAppreciated Property
Fair-Market Value$10,000$10,000
Cost Basis$10,000$4,000
Capital Gain0$6,000
Capital-Gain Tax (15%)0$900
Charitable Deduction$10,000$10,000
Actual Tax Savings (24%)$2,400$2,400
Total Tax Savings$2,400$3,300