Making a Gift of Securities

If you have property, (stocks, bonds and mutual funds), that is worth more than you paid for it and it has been owned for more than a year, you can generally enjoy greater tax savings from giving that property. That’s because giving appreciated property allows you to bypass capital gains tax that could be due if you sold the asset.

You are also entitled to a charitable income tax deduction based on the property’s current value, including any “paper profit.” Giving in this way may enable you to make gifts while conserving cash for other uses and enjoying what may be greater tax savings.

If you have owned a security for more than a year, it has increased in value, and you think it may be worth more in the future, it may be best to donate the stock and at the same time repurchase the same number of shares with the cash you otherwise would have used to make the gift. This will increase the basis in your stock to 100% of its current value and save you capital gains taxes in the future should you sell the stock. This may also make it possible to benefit from a loss deduction should the stock decline in value before it is sold.

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