Donating Stock, Enjoy Extra Tax Savings

Please consider donating stock shares you own to the USTC AF. You will enjoy extra tax savings (bigger if they appreciated significantly) if you are US tax payer.

The basic idea of the IRS rules is that, if you bought some stock shares (be it company options, ESPP purchases, etc.) at $10, and the shares are worth $100 each. You will be able to deduct the full $100 from your taxable income AND you don’t have to pay capital gains tax since you never technically sold the stock.

In this situation, if you sold the stock and kept the income, you are hit with $18 of capital gains tax (20%, assuming long term), and $3.42 of Medicare Surfax (assuming high income, starting 2013), and gets back $78.58 in after-tax cash.

However, if you donated the stock shares to the USTC AF. You’ll enjoy full $100 worth of deduction on your REGULAR INCOME, which will net you approximately $49.6 of tax savings (assuming 39.6% federal bracket and 9.0% state bracket in a high-rate state such as California and New York).

The net effect is, for a cost of $28.98 to you, the USTC AF enjoys a full $100 worth of fund to support our various programs, benefiting young and talented students and faculty members. Of course, your situation may vary, and please consult your accountant for authoritative tax advices.

For more information on this subject, we’ve prepare a few links on the web for you:

http://www.fidelitycharitable.org/giving-strategies/tax-estate-planning/appreciated-securities.shtml,
http://www.fool.com/FoolCharityFund/Donating_Stock.htm,
http://stock.aboutgiving.net/pp/giving-securities/2552