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Last Minute Tax Strategy – Doing Good and Saving on Taxes!


If you are like me, you find the holiday season to be a busy time. Interspersed between buying Christmas gifts, receiving Christmas gifts, and spending time with family and friends, I find myself making last minute donations to my favorite charities.


Here is a neat little trick – avoid capital gains taxes by giving stock certificates that have appreciated in value to your favorite charity!


Giving appreciated stock you’ve held for more than a year is better than giving cash. If you donate stock that has increased in value since you bought it more than a year ago – and if you itemize deductions -- you can take a charitable deduction for the stock’s fair market value on the day you give it away. You’ll also avoid capital-gains taxes on the increase in value over time, which you would have had to pay if you sold the stock then gave the charity the cash proceeds. There is a caveat. You can deduct the fair market value only if you hold the stock for more than a year before giving it away. If you’ve held it for less than a year, your deduction is limited to your cost basis -- what you paid for the stock -- not the current value.


Be sure and ask the charity and your brokerage firm about the procedure and time frame for giving stock. Most banks and brokerage firms require a letter of instruction or letter of authorization to transfer the shares to charity, and a mutual fund company may have a special form. It’s a good idea to start the process at least a week before December 31, so the transfer has plenty of time to be completed during the holidays. Jane Wilton, general counsel for the New York Community Trust, recommends transferring mutual fund shares a few weeks earlier. “Some mutual fund companies are faster than others,” she says.


Oh, and VERY VERY IMPORTANT: Make sure that your brokerage firm knows that you do not want to sell the stock (and thereby incur a capital gains tax), but instead would like a "transfer in kind" to the charity. This way, the charity can sell the stock and use the funds for the charitable purpose without having to pay taxes on the gain.


Want to know more about gifting stocks and estate planning?


Set up an appointment with us or your financial advisor – but hurry – the end of the year is almost here!


by Jack M. Wilhelm


Edward Wilhelm and Jack Wilhelm provide tremendously high value legal assistance to a large number of very desirable clients.


THE WILHELM LAW FIRM, 5524 Bee Caves Road, Suite B5, Austin, TX 78746; (512) 236 8400 (phone); (512) 236 8404 (fax); www.wilhelmlaw.net


DISCLAIMER: The information on this site is not intended to and does not offer legal advice, legal recommendations, or legal representation on any matter. You need to consult an attorney in person for legal advice regarding your individual situation.


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Wilhelm Law Firm, 5524 Bee Caves Rd., Ste B-5, Austin, TX 78746 (512) 236-8400