Give the Growth

If you have a choice, it is usually better to give appreciated stock to Saint Leo University than to give cash. Here is why: You receive an income tax charitable deduction for the appreciated value, not just what you paid for the stock in the first place. You also avoid tax on the growth.

Consider Mrs. Linda Johnson. She wants to give Saint Leo University $5,000. If she wrote a check for this amount, it would cost her $5,000. Let us assume, however, that Linda has stock worth $100 per share that she bought years ago for only $10 a share. Excellent growth, but not unusual for a good growth stock. If Linda gave 50 shares of this stock to Saint Leo University, the gift value would be $5,000, not the $500 she paid for these shares originally. In other words, her $5,000 gift would cost her only $500!

Also, consider the capital gains tax Linda would have to pay if she sold those 50 shares outright. Ouch. She avoids all of that by simply transferring those shares to Saint Leo University. Since Saint Leo University is a qualified charity, the IRS permits us to sell those appreciated shares without paying tax. We are able to avoid the “growth tax,” and so does Linda.

Now do you see why we encourage our donors to “give the growth”? There are, of course, a few rules. First, you must have owned the stock for at least a year and a day prior to making the gift. Second, the value of the gift is determined by the average trading price on the day the gift is made.

Third, the charitable income tax deduction can be applied, on an itemized return, up to 30 percent of the donor’s adjusted gross income, whereas a cash gift is deductible up to 50 percent. Fourth, if you are unable to apply all of the deduction in one year, you have an additional five years to use it.

Your accountant can explain these details and anything else that may apply to your situation. It is prudent to obtain professional advice when making a non-cash gift.

You may agree that “giving the growth” is a good idea, but the process may seem difficult. After all, you may not have considered such a way of giving before. However, giving stock is a common practice for many donors, and it is much easier than most people think.

 

Next Steps

  1. Contact Stephen Kubasek, director of Planned Giving, at (352) 588-8355 or stephen.kubasek@saintleo.edu for additional information on giving personal property.
  2. Seek the advice of your financial or legal advisor.
  3. If you include Saint Leo University in your plans, please use our legal name and federal tax ID.

Legal Name: Saint Leo University
Address: PO Box 6665 - MC 2227, 33701 State Road 52, Saint Leo, FL 33574
Federal Tax ID Number: Please contact us for our federal tax ID number.

 
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results.