Twitter Facebook Instagram Vimeo  

SHARE

Blog

Blog

rss

The Community Foundation Blog


Highly-appreciated stock: If your client missed the ideal window, it’s still not too late to support charity
By The Community Foundation / October 26, 2022
Highly-appreciated stock: If your client missed the ideal window, it’s still not too late to support charity

During a routine check-in meeting, a client casually mentions that their employer was just acquired, their company shares went through the roof, and they cashed out. They are now flush with cash. “I’d like to use some of the money to give to charity,” the client tells you. “Let’s talk about a donor advised fund at the Community Foundation.”

Mentally, the advisor calculates the capital gains taxes the client could have avoided if only they had given some of those shares to a fund at the Community Foundation when the company was clearly growing fast. 

Rest assured that all is not lost. An advisor can still help the client establish a donor advised, field of interest, unrestricted, or other type of fund at the Community Foundation to fulfill the client’s charitable intentions. The client’s gifts to the fund qualify for a charitable tax deduction in the current tax year, helping to offset the income from the sale of the shares.  

Still, this situation is all too common and a good reason to regularly remind clients about their options for making gifts to charity and the tax benefits of such gifts. 

Giving cash to a public charity, which is what your client in this situation would be doing, is always a viable option. The general rule is that your client can deduct cash gifts up to 60% of their adjusted gross income (AGI) in any given year. While this may not completely offset large gains from the sale of the stock, it will help to reduce the client’s taxable income. 

Giving appreciated stock, which is what you wish your client had done, is a very tax-effective method of supporting public charities. Clients who donate stock outright avoid all capital gains tax that would be levied on a sale of the stock if it were sold prior to making the donation. Even with the 30 percent of AGI limitation imposed on gifts of highly-appreciated, long-term capital gains property to a public charity, a client likely will still come out ahead because the client’s AGI is presumably a lot lower than it will be in the year of a future stock sale. 

If you'd like to learn more about how the Community Foundation can help you and your clients or to answer your questions about philanthropy, reach out to Brandon Butterworth, Vice President of Philanthropic Services, at bbutterworth@cfrichmond.org.

 


Additional Resources

blog comments powered by Disqus