As is the case with many families, there are times each year when Ed and Amelia focus their attention on gift giving. For years, they have created a gift list that includes family members, friends and loved ones. Last year Ed and Amelia made an addition to their list and began including their favorite charity in their giving plan.
AMELIA: Years ago, I inherited stock from my grandmother. We held the stock for several years, but decided to sell a portion of it this year. The stock had gone way up in value, and our CPA informed us that we had a capital gain of nearly $120,000. We had always planned on making a charitable gift, and he reminded us that if we were to make a gift of this stock before the end of the calendar year, we would receive a charitable deduction on the gifted shares. This deduction would help offset the capital gain tax on the stock we sold.
ED: We contacted the charity to discuss the best way to make a gift. The advisor noted some of the most common gifts - a gift by check or by transfer of bonds or real estate, to name a few. However, he also mentioned that it might be especially beneficial for us to think about giving some of our remaining appreciated stock.
AMELIA: We were still holding $80,000 in the same highly appreciated stock and did not intend to sell, primarily because of the substantial capital gains tax we already faced. To sell any more would only increase our tax. The gift planner recommended that we consider an end-of-year gift that would help lower our taxes. He called this a Gift and Sale plan. It meant that part of our stock would be sold with a portion of the proceeds coming to us. The remaining portion would be gifted to one of our church and other Christian ministries.
ED: That is what we decided to do. By giving the $80,000 in stock, we received two benefits. First, we avoided a large capital gains tax on that stock. Then we received a charitable deduction. The deduction even offset the capital gains from our prior stock sale of $120,000. We are very pleased with the double benefits of our gift. And we're delighted that we've been able to make a nice charitable contribution to various ministries.