Make a Gift of Securities

Make a Gift Securities to Support the Lloyd Library & Museum

A gift of appreciated property may offer greater tax benefits than a gift of cash because it provides a double tax benefit, capital gain tax savings and an income tax charitable deduction while providing support for the Lloyd.  Here is an example of the advantage of making a gift of stock over a gift of cash.

Cash Gift Example:

Bob and Carol are considering donating $70,000 to the Lloyd Library & Museum.  If Bob and Carol donate $70,000 cash to the Lloyd, they would be entitled to a full fair market value deduction for the cash gift.

Deductions for gifts of cash are limited to 50% of the donors adjusted gross income.  $70,000 is 50% of an adjusted gross income of $140,000.  So long as Bob and Carol’s adjusted gross income exceeded $140,000, assuming no other charitable contributions, they would be able to deduct $70,000 as an itemized income tax charitable deduction.

Assuming an income tax rate of 37% Bob and Carol could save as much as $86,333 in income taxes.  If Bob and Carol’s AGI was not sufficient to use their full charitable deductions in the year of the gift, they can carry the deduction forward on their next five tax returns.

Appreciated Property Gift Example:

What if instead, Bob and Carol donate $70,000 worth of Proctor and Gamble stock to the Lloyd Library & Museum?  They originally bought the stock for $40,000.  Since these shares of stock are appreciated publicly traded securities held for more than one year, Bob and Carol would be entitled to a deduction for the full fair market value of the stock and would completely avoid being taxed on any of $30,000 of long-term capital gain.  If they are in the 20% capital gain tax bracket and subject to the 3.8% net investment surtax, they would avoid $7,140 in capital gain tax.  In addition, Bob and Carol assuming an income tax rate of 37%, they could save up to $25,900 in income taxes ($70,000 deduction times 37% tax rate). Deductions for gifts of appreciated property are limited to 30% of the donors adjusted gross income.  In this example, if Bob and Carol have adjusted gross income in excess of $233,333, they could deduct the entire $70,000 in the year of the gift. ($70,000 is 30% of $233,333.)

Comparison

The table below compares the tax savings from a cash gift versus a gift of appreciated securities. The table illustrates the increased tax advantage of making a gift of securities.

  Cash Gift Stock Gift
Income tax deduction $70,000 $70,000
Income tax savings (at 37% rate) $25,900 $25,900
Capital gain tax savings $0 $7,140
Total tax savings $25,900 $33,040
     

Contact Patricia Van Skaik, Executive Director, pvanskaik@lloydlibrary.org or (513) 419-2574.