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| "Benefits of contributing securities in lieu of cash"* |
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| Gift of appreciated securities may provide significant tx savings for you, for your Federal and State tax returns. The advantages of making a gift of appreciates securities include: Income-tax deduction for the full market value of the stock at the time of the gift Minimize or eliminate capital gains tax on the stock appreciation. |
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Example
Suppose you wish to donate $10,000 to CFHI for "Health Clinic in India." The following table gives you the tax consequences of donating cash or stock. Cash donation assumes that you will sell the same stock, receive $10,000 in capital gains and donate $10,000 to CFHI.
CFHI's Stock Transfer Account Number: 58883066 (Wells Fargo)
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| S.No |
Steps |
Cash Donation |
Stock Donation |
Remarks |
| 1 |
Taxable Capital Gains |
$10,000 |
$0 |
No capital gain is realized when you donate stock |
| 2 |
Donation to CFHI |
$10,000 |
$10,000 |
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| 3 |
Charitable deducation on your tax return, schedule A |
$10,000 |
$10,000 |
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| 4 |
Change in taxable income after donation (step 3 - step 1) |
$0 |
-$10,000 |
Donating stock still gives deduction but without any capital gains |
| 5 |
Additional tax savings @ 39% combined Federal & State tax rate (step 3 x 0.39) |
$0 |
$3,900 |
You pay $3,900 less in taxes |
| 6 |
Net amount you contributed |
$10,000 |
$6,100 |
Uncle Sam contributed $3,900 to your favorite cause - providing health services to underserved populations |
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Please note that we have assumed a simple case of 28% Federal Tax and 10% State tax brackets with no other complicating factors such as Alternate Minimum Tax (AMT). Please consult your tax advisor for your specific situation.
*Excerpt courtesy of Indians for Collective Action (ICA), "Benefits of Contributing Securities in lieu of Cash", ©2002.
For more information, contact David Tozer (Development & Outreach Manager).
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