BENEFITS OF STOCK
DONATIONS
You can become a DreamMaker and realize two tax
savings by contributing stock as a gift to The Center for Contemporary Dance,
Inc.:
1. Deduction for charitable
contribution: Federal tax law permits
taxpayers who itemize to deduct the current value of charitable
contributions from their adjusted gross income. To qualify for
such a deduction, the stock must have been held by the taxpayer for
more than one year.
2. Save on capital gains tax:
Contributions of stock may have no tax
liability on the difference between the cost of donated stock and
its current, fair market value (FMV): i.e. there may not be tax on
the capital gains.
Here's how it can work:
Assume you purchased 100 shares of XYZ Corporation in
2001 for $2,000. Today, the shares are worth $10,000. If
you sold the stock, you would realize an $8,000 capital gain.
Under current tax rules and assuming a 20% tax rate, you could owe
as much as $1,600 in federal capital gains
tax.
You decide to make a $10,000 gift to The Center for Contemporary Dance,
Inc. Normally,
you make your gift by check, but this year you decide to see whether
a stock gift would work better for you. Your comparisons are
(federal tax benefits only):
|
|
Option A
Give
Securities
As
Gift |
Option B
Give
$10,000
by
Check |
Option C
Sell Securities &
Give Cash |
|
Gift
Value |
$10,000 |
$10,000 |
$10,000 |
|
Ordinary
Income Tax Savings |
$3,960 |
$3,960 |
$3,960 |
|
Capital Gains Tax
(saved or
paid)
Assuming
a 20% Tax Rate |
$1,600
Saved |
N/A |
$1,600
Paid |
|
Net Tax
Savings |
$5,560 |
$3,960 |
$2,360 |
This example illustrates
the potential value of a stock gift and highlights some of the
maximum available benefits. These benefits depend on a number
of things, including the amount of the stock's appreciation, your
adjusted gross income and current federal tax rules. On the other
hand, if you're holding securities at a loss, sell them first
and then donate the cash. That way, you can claim the loss on your
tax return.
We
strongly advise that you contact your accountant or other tax
advisor to determine the exact income tax effort of your stock
donation to The
Center.
To
make a stock donation to The
Center for Contemporary Dance, Inc., please contact our Donor
Care Department for instructions, either by phone at (407) 695-8366 or via email at Kim@TheCenterForDance.org.
| 
