As stock markets fluctuate, your portfolio likely consists of winners and losers. Each may represent special gift planning opportunities that can also be advantageous. Here are four ideas.
Do you want to dispose of a highly appreciated stock but hesitate because of the capital gains tax you would owe? With the maximum capital gains rate for stock at 20 percent, this is an obstacle that undermines an otherwise sensible financial move.
Fortunately, there may be a way to receive tax benefits and support Shriners Hospitals for Children®. How? With a gift of appreciated stock, you may qualify for an income tax charitable deduction for a stock’s fair market value and eliminate the tax on the appreciation.
In order to qualify for the fair market value deduction, you must have owned the stock for more than one year. If you acquired shares of the stock at different times, you can maximize your tax savings by donating the shares that have the lowest cost basis.
Perhaps you own a stock whose performance has been outstanding, but you would rather not give it away because you expect it will continue to outperform other equities in your portfolio. And yet, this stock has produced large capital gains and would make a wise tax-saving charitable gift.
There’s an easy solution. Contribute the shares to Shriners Hospitals for Children. Then, buy the same number of replacement shares on the market. You’ll wipe out your past capital gains tax liability and still maintain your position in a favorite investment. To provide funds for the purchase, sell an investment that has lost money and take advantage of a potential capital loss deduction.
For maximum tax savings on depreciated stocks, sell them and take any allowable loss. Donate the cash proceeds to Shriners Hospitals for Children. This way, you may qualify for a charitable deduction for the cash gift, and you can offset the losses against any gains this year.
If your overall losses exceed your gains, you can deduct up to $3,000 (if you are married and filing jointly; $1,500 for single filers) of the excess loss from ordinary income – and carry over excess losses to future years.
If you depend on dividends to pay your bills, you could be squeezed by rising living expenses.
One way to improve your bottom line is to put some of your low-dividend holdings into a life income gift such as a charitable gift annuity or charitable remainder trust. With a charitable gift annuity, you receive fixed payments for life. Often, you can increase your income when you donate low-yield securities. You may qualify for an income tax charitable deduction for a portion of the value of the gift and save on capital gains taxes when you contribute appreciated stock. It is also a great way to support Shriners Hospitals for Children when the balance becomes available for Shriners Hospitals for Children’s needs.
With a charitable remainder trust, the trust will pay you income for life or a term of years (up to 20). Then, when the trust ends, the balance will support Shriners Hospitals for Children’s vital needs.
To further capitalize on the benefits of a charitable remainder trust, contribute long-term highly appreciated stocks that pay you only meager dividends. You will unlock the appreciation without paying up-front tax on their capital gains – and you’ll receive a partial income tax deduction.
We would be glad to provide you with illustrations of the tax and financial benefits you would have with any of these strategies. Together with your advisor, we can help you invest in the future of Shriners Hospitals for Children and avoid market woes and tax consequences.
Information contained herein was accurate at the time of posting. The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.Privacy Policy | Cookie Policy
4 minute read
As stock markets fluctuate, your portfolio likely consists of winners and losers. Each may represent special gift planning opportunities that can also be advantageous. Here are four ideas.
Do you want to dispose of a highly appreciated stock but hesitate because of the capital gains tax you would owe? With the maximum capital gains rate for stock at 20 percent, this is an obstacle that undermines an otherwise sensible financial move.
Fortunately, there may be a way to receive tax benefits and support Shriners Hospitals for Children®. How? With a gift of appreciated stock, you may qualify for an income tax charitable deduction for a stock’s fair market value and eliminate the tax on the appreciation.
In order to qualify for the fair market value deduction, you must have owned the stock for more than one year. If you acquired shares of the stock at different times, you can maximize your tax savings by donating the shares that have the lowest cost basis.
Perhaps you own a stock whose performance has been outstanding, but you would rather not give it away because you expect it will continue to outperform other equities in your portfolio. And yet, this stock has produced large capital gains and would make a wise tax-saving charitable gift.
There’s an easy solution. Contribute the shares to Shriners Hospitals for Children. Then, buy the same number of replacement shares on the market. You’ll wipe out your past capital gains tax liability and still maintain your position in a favorite investment. To provide funds for the purchase, sell an investment that has lost money and take advantage of a potential capital loss deduction.
For maximum tax savings on depreciated stocks, sell them and take any allowable loss. Donate the cash proceeds to Shriners Hospitals for Children. This way, you may qualify for a charitable deduction for the cash gift, and you can offset the losses against any gains this year.
If your overall losses exceed your gains, you can deduct up to $3,000 (if you are married and filing jointly; $1,500 for single filers) of the excess loss from ordinary income – and carry over excess losses to future years.
If you depend on dividends to pay your bills, you could be squeezed by rising living expenses.
One way to improve your bottom line is to put some of your low-dividend holdings into a life income gift such as a charitable gift annuity or charitable remainder trust. With a charitable gift annuity, you receive fixed payments for life. Often, you can increase your income when you donate low-yield securities. You may qualify for an income tax charitable deduction for a portion of the value of the gift and save on capital gains taxes when you contribute appreciated stock. It is also a great way to support Shriners Hospitals for Children when the balance becomes available for Shriners Hospitals for Children’s needs.
With a charitable remainder trust, the trust will pay you income for life or a term of years (up to 20). Then, when the trust ends, the balance will support Shriners Hospitals for Children’s vital needs.
To further capitalize on the benefits of a charitable remainder trust, contribute long-term highly appreciated stocks that pay you only meager dividends. You will unlock the appreciation without paying up-front tax on their capital gains – and you’ll receive a partial income tax deduction.
We would be glad to provide you with illustrations of the tax and financial benefits you would have with any of these strategies. Together with your advisor, we can help you invest in the future of Shriners Hospitals for Children and avoid market woes and tax consequences.
Information contained herein was accurate at the time of posting. The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.Privacy Policy | Cookie Policy