News for Professional Advisors

Donating Appreciated Stocks

As an advisor, you've likely counseled clients through different taxable events. Maybe the sale of a business. Maybe a property inheritance. Or, maybe you've worked with clients who own stock in a business like Raven Industries that’s recently increased in value.

But, did you know your clients can reduce their taxation from these events by donating those non-cash assets to a donor advised fund at the Community Foundation?

Donating appreciated assets such as stocks and securities has always been a tax-wise philanthropic strategy. This method not only allows a donor to avoid capital gains tax, it also provides an immediate deduction for the fair market value of the asset. What’s more, it gives donors time to thoughtfully consider where and how to apply their charitable gifts for the greatest impact.

While donating appreciated stocks and securities has always been popular, with new proposed tax law changes on the horizon, we are predicting an even greater surge in the number of donors who choose to use non-cash assets to fund their philanthropy.

Preliminary proposals and several bills recently introduced in Congress may provide an even greater incentive for gifts of appreciated assets. Currently, high-income earners pay a 20% capital gains tax when selling assets held for longer than one year. Under one proposal, those who earn more than $1 million could see a 39.6% capital gains tax rate, with the tax hike retroactive to the date of announcement.

Of course, the tax change is still under negotiation and it’s tough to predict whether the retroactive capital gains tax increase will survive negotiations in Congress.

Whatever changes may happen, there’s simply never been a better time for your clients to make a gift of appreciated stock or securities to support the charities that matter most to them. And again, it’s important to remember: When your clients make outright gifts of appreciated assets, they essentially receive a double benefit: they’ll eliminate capital gains tax and they’ll receive an immediate deduction of the fair market value of their asset.

Want to learn more about how to help your client donate non-cash assets? We’re here to help! Contact us at 605.336.7055.