You can gain tax benefits by donating stock
Is there appreciated stock in your portfolio that you would like to sell? Unsure about paying more on your tax return? Then making a charitable contribution instead might save you money, if you donate it to charity rather than making a cash gift.
Appreciated publicly traded stock you’ve held for more than a year is long-term capital gains property. If you donate it, you can both avoid the capital gains tax you’d pay if you sold the property and deduct its current fair market value.
Let’s say you donate $10,000 of stock that you paid $4,000 for, your ordinary-income tax rate is 33% and your long-term capital gains rate is 15%. If you sold the stock, you’d pay $900 in tax on the $6,000 gain. If you were also subject to the 3.8% net investment income tax (NIIT), you’d pay another $228 in NIIT. By instead donating the stock to charity, you save $4,428 in federal tax ($1,128 in capital gains tax and NIIT plus $3,300 from the $10,000 income tax deduction). If you donated $10,000 in cash, your federal tax savings would be only $3,300.
If you are charitably inclined or would like to minimize taxes related to your investment portfolio, Ciuni & Panichi, Inc. can help find the strategies that will best achieve your goals. The tax professionals at Ciuni & Panichi, Inc. can assist you with determining if this option is right for you. Contact Jim Komos at 216.831.7171 or jkomos@cp-advisors.com and see if a donation is right for you.
Mr. Komos is the Partner-in-Charge of the firm’s Tax Department. He has experience in all facets of taxation for closely held businesses, their owners and key personnel. His clients are in a wide range of industries, including manufacturing, service, real estate, and construction.
© 2014
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