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A2 giving appreciated securities

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To make a gift of appreciated securities, please contact Jeff Mallory (This email address is being protected from spambots. You need JavaScript enabled to view it.).

Why does giving securities often make more sense than giving cash?

If you own securities, such as stocks, bonds, or mutual fund shares, it could be to your advantage to give the securities instead of cash to Asian Access. This is only true for appreciated securities—those which have gone up in value since your purchase—and which you have held for at least 12 months since purchase.

The best way to explain this is by example. Assume you own stock with a current value of $10,000, you have held the stock for at least 12 months, and your purchase price for the stock was only $3,000.

If you give that stock to Asian Access, you will receive a charitable deduction for the full $10,000. If you happen to be in the 35% income tax bracket, that will give you a tax savings of $3,500.

In addition, you avoid paying the capital gains tax you would have owed had you sold the stock instead of giving it. Capital gains tax is applied to the increase in value from the time you acquired until the time you sell. In our example, capital gains would be $7,000 ($10,000 minus $3,000). Therefore, if you are in the 20% capital gains tax bracket, you avoid additional taxes of $1,400 (20% of $7,000).

If you sell the stock, you will receive only $8,600 after paying capital gains tax. By giving the stock to Asian Access, you avoid $1,400 of capital gains tax and you receive a tax deduction of $3,500. But Asian Access gets the full value of the $10,000 gift to use in our ministry to develop strong leaders in Asia.

Your situation will be different, of course, but as long as the value of the security when given is greater than its value when purchased, and you have held it for at least a year, the cost of the gift to you will be less than its value to Asian Access. Always check with your tax adviser before transferring securities.

What if I like this stock and want to keep it?

It can still be to your advantage to give it to Asian Access. Here’s why. Continuing with the example above, in the future, if you ever decide to sell the stock, you’ll have a cost basis of only $3,000. You will have to pay capital gains tax on the difference in value at the time you sell it. If the value keeps increasing, that could be substantial.

But if you give the stock to Asian Access, you can buy it in the market on the same day for virtually the same price. In our example, this increases your cost basis to $10,000. Now, should you decide to sell the stock in the future, your capital gains will have been reduced by $7,000, saving you $1,400 in capital gains tax if you are in the 20% capital gains tax bracket at the time you sell. 

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PO Box 3307  Cerritos, California 90703 USA

email:  info @ asianaccess.org
phone:  (626) 914-8990
web:  asianaccess.org

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