Gifts of appreciated publicly-traded stock

Tax laws provide favorable treatment for donating items with long-term capital gains to charitable institutions. For churches, this takes the form of people giving stocks. Such gifts have a substantial impact on many church's ongoing operating expenses, as well as playing a significant role in financing new ministry thrusts, buildings, and land purchase. This post explains what pastors and church leaders need to know about this form of financing.

In effect, this allows a donor to give more money for less pain than if they sold the stock and donated the after-tax proceeds. If the donor exceeds this, they can carry over the remainder of the contribution to subsequent years.

For this to work, the donor must NOT sell the stock and donate the proceeds.

That would trigger a tax event for the donor on their gain. The tax advantage comes when the donor gives the shares to the church. The donor gets the deduction, the church receives the stock, and when the church sells it the church does not pay tax it's a non-profit.

So the church receives the full value of the shares. This is a VERY EFFICIENT way of donating money to a church. The most common use of this process occurs when someone gives shares of a publicly-traded stock to a church. Some donors give their tithes several months to a year ahead using this method.

Especially when a donor tithes in the form of stock gifts, the church want to spread their use of the donation over a period. To receive donated stock, the church needs a full-service brokerage account, preferably with an office near the church, to efficiently receive the shares.

I don't know of a discount or online brokerage that can handle this. The process is complex enough that it can frustrate a donor unless there's a pretty high level of customer service. The process begins when a donor contacts the pastor or designate and explains the desire to donate a certain number of shares of a particular stock to the church.

The church provides the donor with the needed details: This number allows the shares to transfer electronically. The two brokers can handle it from there. A transfer from one brokerage account to gifts of appreciated publicly-traded stock brokerage account usually takes about five business days. This donation letter should not state the transfer price.

It should ONLY include the kind of stock, the number of shares, stock trading pro software the gift date. This satisfies the IRS. One thing is for sure: This is the gift date.

Gifts of shares, stock options, and other capital property

If it was handed over after the close of the stock market, the gift date becomes the next day that the market opens. For Over the Counter OTC stocks, it is the average of the closing bid and the asking price on the gift date.

Another way to establish the donation price is to clip is nigerian stock market efficient the stock gifts of appreciated publicly-traded stock of the newspaper, being sure to leave the gift date attached. The donor can also find historical stock prices of any stock on many websites, print it out, and file it with their tax information. IRS Form is used to claim deductions for non-cash charitable contributions.

See also "IRS Publication ways to make quick money legally or illegally Determining the Value of Donated Property. If the shares were received through some sort of stock grant or stock option from an an employer, there are usually ways to turn most or all of the increase into put option notional capital gains.

Such shares are candidates for this same donation strategy.

See your tax adviser for details, as there are many forms of employee stock remuneration. Usually this policy is established by the Church Board or whatever is the highest level governing body of that local church or non-profit. Most churches are uncomfortable managing an investment portfolio of donated money, nor do they want to burden a person or small committee with such a financial responsibility.

So it is common for churches to sell the shares immediately. If your church is sophisticated enough to manage market risk, I suggest that you set up a policy something like this as we did at New Life: Use the value of the stock on the gift date to define the exact amounts to go in each category.

Any increase or decrease in the value of the shares after the gift date is absorbed by the general church funds. If these funds grow to become substantial, the church will want to establish a separate Investment Fund until the Lord makes it clear what he wants this money used for.

This approach worked very well at New Life. Some donors gave stock which we did not need to sell for operating expenses, so we chose to hold it. It rose nicely and generated a good sum that we eventually put toward the costs of a new building.

Every year or 3 or 6 months the church provides giving statements to all contributors of record. Stock donations should appear on this giving statement, but should not show the dollar value of the gift. The data should include the number of shares, the kind of stock, the gift date, and any distributions directed by the donor.

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The Advantage and the Concept Tax laws provide favorable treatment for donating items with long-term capital gains to charitable institutions.

Charitable Gifts of Publicly Traded Securities - The New York Community Trust

The mechanics of stock donations To receive donated stock, the church needs a full-service brokerage account, preferably with an office near the church, to efficiently receive the shares. How stock gifts show up on individual giving statements Every year or 3 or 6 months the church provides giving statements to all contributors of record. Page authored by Tim Isbell. Use Print function below; with Scale to Fit.