Donating Stock to RJF: Why It May Be Better Than Donating Cash
If you are thinking about making a donation to Richmond Jewish Foundation, a gift of stock may be more tax-wise than a cash gift. As stocks grow in value, they may appreciate substantially beyond the original investment. When the stocks are sold, any growth above the original cost is considered a capital gain and is subject to capital gains tax of up to 20 per cent or more (15 per cent federal rate plus a 5 per cent or more state rate). By giving RJF appreciated securities (that have been held at least a year and a day), you can avoid the capital gains tax and receive an income tax deduction for the fair market value of the stock at the time of the gift.
Mr. Smith owns a stock with a current value of $10,000. He originally paid $2000 for the stock (his “cost basis”). This means when he sells the stock, he may pay a 20 percent tax on the appreciation ($8000 in appreciation x 20 per cent tax rate = $1600). By giving the stock to RJF rather than giving cash, he not only will receive an income tax deduction for the fair market value of the stock on the day of the gift, he also will avoid the $1600 in taxes.
Stock – $10,000
Cost Basis – $2,000
Appreciation – $8,000
Capital gains tax avoided by making gift – $1,600
Charitable tax deduction – $10,000
How to Make the Transfer
To transfer shares of publicly traded stock to RJF, call your broker and instruct them to transfer the stock to the Richmond Jewish Foundation account. RJF maintains accounts at several major brokerage firms with standing sell orders. If we do not have an account with your broker, we can provide them with the information they will need to complete the transaction. To insure proper handling of your gift, please call Joice Burnette, Foundation Administrator, at (804) 545-8628 to notify us of a pending stock gift.