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Gift of Appreciated
Asset
Gifts of appreciated assets
are attractive for many Millsaps alumni and friends. First, this
type of gift allows them to make a larger gift than what the asset
actually cost. For example a stock which cost $1,000 and which has
appreciated to $5,000 enables the donor to make a $5,000 gift with
an asset that only cost them $1,000. Second, the after tax cost
of this kind of gift is actually lower than the after tax cost of
selling the asset and giving the proceeds. Consider the following
example: Bob and Jan own $10,000 worth of stock that they purchased
nine years ago for $3,000. They are considering selling the stock
to make a $10,000 gift to Millsaps. They are in the 28% income tax
bracket.
|
Sell/Gift
Proceeds |
Stock
Gift |
| Gift
amount |
$10,000 |
$10,000 |
| Cost
basis |
$ 3,000 |
$ 3,000 |
| Capital
gain |
$ 7,000 |
$
0 |
| Capital
gains tax (20%) |
$ 1,400 |
$
0 |
| Income
tax deduction |
$10,000 |
$10,000 |
| Tax savings
at 28% |
$ 2,800 |
$ 2,800 |
| Net tax
savings |
$ 1,400 |
$ 2,800 |
| After-tax
cost of gift |
$ 8,600 |
$ 7,200 |
Deductions for gifts of appreciated assets are limited to 30% of
your adjusted gross income. However any unused portion of your deduction
may be carried forward up to an additional five years. This will
usually enable you to enjoy the full amount of your deduction.
How do I go about making a gift like
this?
Before making a gift of an
appreciated asset, please call us first. While we can and do accept
gifts of many types, there are a few that can pose special consideration
such as real estate and mineral or timber interests. The most typical
asset used for this kind of gift is marketable stocks and bonds.
After you have contacted us about your gift intention, we will determine
the most effective way to transfer your assets to Millsaps. For
securities, this may be stock power, or by transferring the securities
to one of our brokerage accounts. We can often save you sales commissions
by handling the transaction through one of our broker relationships.
Deeds transferring real estate will have to be prepared by our attorneys
- subject to our acceptance policies regarding real property. Other
assets will be handled on a case by case basis.
What about appraisals?
To satisfy IRS requirements,
you are required to have an independent appraisal of any asset that
does not have a readily available market value such as stock. In
some cases Millsaps will also obtain an appraisal, however it is
important that you have your own appraisal to substaniate your charitable
deduction and to include with your tax return.
DISCLAIMER
The information contained in this site is for educational purposes
only. The reader understands that Millsaps College is not
rendering legal advice and that the reader should seek independent
legal counsel when contemplating estate planning decisions.
For
More Information Contact
Gift and Estate Planning
Services
P.O. Box 151191
Jackson, MS 39210-1191
(voice) 601-974-1035 (fax) 601-974-1088
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