When deciding what charitable gift to make, consider the type of property you own. While your home may be the biggest investment, many people also own other types of assets: publicly traded stocks and bonds, commercial business holdings, undeveloped property, farmland, vacation homes and tangible personal property (such as artwork, jewelry or antique furniture). Did you know that all of these assets are regularly used to fund gifts?
Many of these assets have grown in value over the years. For example, a stock may be worth many times its cost basis. If a stock was worth $10 at the beginning of 1981 and has increased an average of 10 percent per year (growth plus reinvested after-tax dividends), it is worth $144 at the end of 2008. This means that an initial investment of $100,000, given the same growth assumptions, is worth more than $1.4 million.
Many closely held businesses have grown in value even more. Usually, the business owner has a zero cost basis in the stock, often has received no or few dividends and today owns an asset of almost unbelievable worth.
Turn It Into a Cost-Effective Gift
By the time people are ready to reinvest their appreciated stock, or retire and either sell their business or pass it on to their children, they find themselves in a bind. They cannot sell or transfer ownership without facing a tax on the appreciation—a capital gains tax.
Fortunately, it's also around this time of life that people are prepared to support their favorite charitable organizations, like Kappa Alpha Order Educational Foundation. And it just so happens that most gifts of appreciated assets to KAOEF or other charitable organizations are not subject to federal capital gains tax.
If you, too, are in this situation, make the gift of the asset itself, and not the after-tax proceeds. Many charitable organizations, including Kappa Alpha Order Educational Foundation, accept many types of assets, and all of them accept liquid assets, such as publicly traded stocks and bonds.
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For more information, please contact Erik Showalter at 540-460-1401 or 540-463-1865 or eshowalter@ka-order.org.
The information in this Web site is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income tax include federal taxes only. Individual state taxes and/or state law may impact your results.
