Gifts of Stock & Mutual Funds
Donating stock or mutual funds to Pals For Life may be the most tax-advantaged gift strategy for your situation.
Consider the benefits by comparing a $5,000 outright gift of cash and a $5,000 gift of appreciated securities:
Charitable Deduction: Both gifts entitle the donor to an income tax charitable deduction for the full value (in this case: $5,000).
Capital Gains Tax Avoidance: By donating publicly traded securities or mutual fund shares that have been held for longer than one year, the IRS allows you to make the transfer without realizing any capital gains in the asset transferred.
This additional benefit allows you to make a tax-advantaged gift even if you do not itemize your tax deductions.
Because Pals For Life is a non-profit, we do not offer tax advice. We suggest that you work with your financial and tax advisors to consider what type of gift makes the most sense for your situation. Of course, we are always happy to work with you and your team to determine the best strategy to achieve your charitable goals at Pals ForLIfe.
Turning Required Minimum Distributions into charitable gifts
Individuals over 70½ who are currently taking Required Minimum Distributions (RMD’s) from an Individual Retirement Account (IRA) are allowed to transfer distributions directly from their Custodian Pals For Life. Gifts made with this strategy are tax-free to the donor, subject to the rules described below:
- You must be at least 70 ½ at the time of the distribution to charity;
- The distribution must come from an Individual Retirement Account (IRA)
- Gifts from other retirement vehicles (such as 401(k) or 403(b) will not be tax-free but may entitle the donor to a charitable deduction;
- An individual may transfer up to a total of $100,000 per year and a married couple may give up to $200,000;
- As long as you have not already taken your Required Minimum Distributions for the year in which you make your gift, this transfer can count toward your required distributions for that year;
- Your gift must be transferred directly from the IRA account to Pals For Life.
- Because the transfer is tax-free to begin with, there is no charitable deduction.
Avoiding the Capital Gains tax with non-cash gifts
Stock, Mutual Funds and Bonds
Donors who give certain assets held for longer than one year that have appreciated in value can save even more in taxes than by giving with cash or by check. By doing so, they avoid the capital gains tax they would have to pay if they sold the asset, and they are still eligible for a federal income tax charitable deduction for the full value of their gift.
These types of assets can also be great for funding charitable gift annuities or remainder trusts.