Donating Appreciated Stock to Wintergreen Adaptive Sports

The Wintergreen Adaptive Sports Investment Account is held at SunTrust Bank.

The Wintergreen Adaptive Sports Investment Account is held at SunTrust Bank.

Donating appreciated stock to Wintergreen Adaptive Sports, in lieu of a direct cash donation, may include substantial additional tax savings to you the donor. This is because such a donation may be deducted from your income at its full fair market value, and because you need not pay capital gains tax on the appreciated amount.

Example:

Stock in Company A purchased by you over a year ago for $1,000 is now worth $2,000. If the proceeds from the sale of this investment were then used to make a direct cash contribution, the capital gains tax on the gain [$1,000] would not only represent a tax liability but also reduce the amount you’re able to donate (if it’s limited to the proceeds of the stock sale) by the amount of the capital gains tax (15 percent, or $150 in this case, if you’re in the25, 28, 33, or 35 percent tax brackets; or 20 percent, or $200 in this case, if you’re in the top 39.6 percent tax bracket). Naturally, this would also limit your deduction for the charitable contribution to this lesser amount.

Donation of the appreciated stock worth $2,000, on the other hand, would trigger no capital gains tax and would also render a deduction for the charitable contribution in the higher $2,000 amount.

For a taxpayer in the 25 percent tax bracket, for example, the difference in tax liabilities between the two scenarios illustrated above would be $187.50, equal to $150 (the capital gains tax) + 37.50 (25% of the difference in deductible amounts).

Two Caveats:

  1. To realize the full exclusion of capital gains from taxation, the stock must have been held by you for more than one year. If not, the deduction is limited to the “cost basis” (i.e., what you paid for it, not its current fair market value at which you donated it).

  2. Taking advantage of this double tax benefit may trigger a higher “alternative minimum tax” requirement. (To gauge this threshold, see IRS Publication 526: http://www.irs.gov/pub/irs-pdf/p526.pdf and instructions for Form 1040, Schedule A: http://www.irs.gov/pub/irs-pdf/i1040sca.pdf)

FOR MORE INFORMATION ABOUT DONATING APPRECIATED STOCK HOLDINGS TO WINTERGREEN ADAPTIVE SPORTS, CONTACT WAS EXECUTIVE DIRECTOR DAVID SHREVE(434-466-3283; EXECUTIVEDIRECTOR.WAS@GMAIL.COM), OR THE WAS SUNTRUST INVESTMENT ASSOCIATE, BRANDI FITZGERALD ( 434-979-6034;BRANDI.FITZGERALD@SUNTRUST.COM)