Appreciated Securities

The IRS still offers you a notable tax break for charitable gifts: you may deduct the full, fair market value of appreciated assets that you give for the AADC, and also avoid capital gains liability on the transfer. This means that you can make a larger donation if you use an appreciated asset to make your gift instead of cash.

The most common appreciated asset, and the easiest to donate, is marketable stocks and bonds. Here are some details about these gifts:

• How will your gift of stock be valued? The value is the average of the high and low stock price on the date of the transfer to us. If the high bid was $75 and the low was $72 on the day you made your gift, your deduction would be $73.50 per share.
  
• Don't sell the stock first! Even though you give us the proceeds as a gift, the IRS will impose capital gains tax on your sale, wiping out the benefits of this arrangement.
  
• When is your gift complete? If your stock is held by your broker, it's the date the shares reach our account. If you hold the stock yourself and you mail it to us, it is the date upon which you surrender control of the shares, fixed as the date of the postmark on the envelope enclosing the shares.
  
• How should you transfer securities to us? If your broker holds the shares, he or she should contact one of the following individuals at Fiduciary Trust Company, our broker:
  
  

  Depository Trust Company account #352 for JPMorgan

  For the benefit of: Associate Alumnae of Douglass College Gift Account - A/C #54128840

  Complete "special instructions" with donor's name and date of transfer

  Name and address of receiving firm: JPMorgan Clearing Corp.
  Four Chase Metrotech Center
  Brooklyn, NY 11245
  Tax ID number on receiving account: 22-1607270

  Please copy, call, or email Susan Sturgill in our office with the instructions you have given your broker(name of stock, number of shares being transferred). We will work with your broker to assure that the transfer is completed properly.

  If you hold the certificate in your name, send it by registered mail unendorsed. In a separate envelope mail a signed stock power for each stock certificate, to:
  
  Valerie Anderson, Executive Director
  Associate Alumnae of Douglass College
  181 Ryders Lane
  New Brunswick, NJ 08901-8557
  
  To download a blank stock power, click here.
  
  

• Can you deduct the full amount of your gift? Yes, within this limitation: the IRS says that you can deduct gifts of appreciated assets up to 30 percent of your adjusted gross income ("AGI" -- the figure at the bottom of the first page of Federal Income Tax Form 1040. Click on the Glossary on the left hand navigation for full definition.) Thus, if your adjusted gross income will be $100,000 this year, you will be able to deduct up to $30,000 in gifts of stock. A gift in excess of the 30 percent amount is not wasted, however, because the IRS allows you to carry forward excess deductions through the five tax years following the year of your gift.
  Note that the IRS allows cash gifts to be deducted up to 50 percent of adjusted gross income. Therefore, the deduction for a large gift of appreciated assets could take longer to claim than the deduction for the same gift made in cash. But if the donated assets had a small cost basis (see Glossary for definition), they could still be more tax-efficient to use than cash.
  
• What if your stock has declined in value? The fair-market deduction rule works against you: if you bought stock for $50,000 and it is now worth $30,000, your charitable deduction will be limited to $30,000. You will not earn a capital loss by making the transfer to us, either. It is better to sell depreciated stock, claim the resulting tax loss as one deduction, then make a deductible cash gift with the proceeds.

If you are considering a gift of appreciated securities, email us, complete the personal illustration form, or call us at 732-246-1600 so that we can assist you through every step of the process.