Donation of Securities FAQ’s
- Why should I donate stock rather than cash?
- Because you can donate more money that way. If you sold the stock and then donated the cash, you would likely first have to pay a 15% or 20% tax on any long-term capital gains that the sale generated, depending on your tax bracket.
- Can I donate stock from an IRA or 401k?
- While you can make donations from an IRA or 401k, it works in a different manner than donating stock from an Individual, Joint, TOD, or Trust account. Stock or mutual fund donations help people donate securities with capital gains and IRA’s and 401k’s don’t track and tax capital gains in the same manner.
- Do I pay taxes on capital gains?
- By donating stock directly to the church you do not need to pay taxes on any capital gains the stock or mutual fund may have.
- Can I claim a deduction for donating stock?
- Tax rules and options vary from person to person depending on various financial factors. In general, donating stock would be a tax deduction if you claim itemized deductions. It is a good idea to check with your tax professional in regards to the deductibility of a stock or mutual fund donation.
- Is it difficult to donate stock to the Church?
- With the use of our donation form, donating securities to the church is easy. If you need any assistance with filling out the form please contact your Financial Advisor or Sloan Financial Solutions for help.
- Is a stock donation right for me?
- Always check with your tax professional before engaging in any donation or transaction. They will be able to help provide personalized advice for you.
- Who do I return the completed form to?
- Give the original form to your broker or financial advisor to process the donation. Send a copy of the form to firstname.lastname@example.org Attn: Trust Fund Committee.
- Who should I contact with questions?
- Your tax professional is a good person to contact with any tax related questions. For filling out the form contact your broker, financial advisor, or Sloan Financial Solutions (715-418-2044).
Example of Tax Savings on Donated Stock
Let’s say you bought 100 shares of XYZ Corp. two years ago at $20 per share, for a $2,000 cost basis (100 x $20 = $2,000). If XYZ now trades at $50 per share, the fair market value of your 100 shares has risen to $5,000 (100 x $50 = $5,000).
If you were to sell those shares in order to donate the after-tax proceeds to the church, you would owe $600 in federal taxes under the top long-term capital gains tax rate of 20%: (5,000 - 2,000) X 0.2 = 600. That would permit a donation of $4,400 (5,000 - 600).
Donating the stock instead would net the charity its full $5,000 value. It would also entitle you to claim a $5,000 itemized deduction, within certain limits.