FINANCIAL CORNER
By Lily M. Hazelton, CLU, ChFC, CFP R of Brecek & Young Advisors, Inc.

DONATION OF APPRECIATED STOCK TO TACC

Since TACC is raising funds to purchase a permanent site, I have been requested by Jinwun Lue, president of SDTCA, to provide further information regarding the benefit of donating appreciated stock to TACC.

The purpose of this article is not to give tax advice but to emphasize the additional benefit of donating appreciated stock instead of giving cash under certain circumstances. Readers should always consult with their own tax professionals in making the decision on their charitable giving and in obtaining the tax benefit applicable to their own situation.

As most of us know, a charity pays no tax on the receipt of donation of stock (or cash). Any individual, who itemizes deductions, is entitled to an income tax deduction for the fair market value of the stock donated, if the stock has been held for more than one year. The allowable deduction is limited to 30% of one’s adjusted gross income (AGI). Any amount that exceeds the limit can be carried over and deducted in the following year for up to five (5) succeeding years. Further limits may apply if AGI exceeds a certain amount.

Example: Suppose Mr. Chen donates stock worth $30,000 to TACC. The stock cost Mr. Chen $12,000 when he purchased it 5 years ago. By donating the stock to TACC, Mr. Chen avoids the tax on the $18,000 long-term capital gain and receives a potential income tax deduction (depending on Mr. Chen's adjusted gross income) of $30,000, the full market value of the gift.

Different rules apply to the deduction of any donated stock with a short-term capital gain (stock held for less than one year).

The information contained herein is not intended as a substitute for direct financial or legal advice. Brecek & Young Advisors, Inc. does not provide tax advice. Please contact a tax or financial professional for further information.