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Take stock: make a huge difference to your favorite charity and save yourself lots of $$$

It bears repeating: an ideal asset for a charitable donation to your favorite nonprofit is stock. To be more specific, appreciated publicly traded stock that has been held for more than one year.

You can receive a double federal tax benefit for gifts of stock. Under federal tax law, the [1] long-term capital gain is excluded from taxable income and [2] the charitable contribution deduction is the fair market value of the stock. It can make a huge difference to you, the donor.

Three rules to keep in mind:

  1. You must have owned the stock for more than one year. Otherwise, you only get to deduct the basis, not the current fair market value.
  2. The value of the contribution is the average of the high and low prices for publicly held stock on the day of transfer to the charity.
  3. There are limits on the deductibility of gifts of appreciated property. This limit is 30% of your adjusted gross income. Amounts that you can’t use in the current year can be carried forward to be used in future years. It’s called a “five year carry forward.”

Keeping those rules in mind, though, stock is a very tax savvy gift. More soon!

Gordon Fischer Law Firm, P.C. is dedicated to promoting and maximizing charitable giving in Iowa. Gordon can be reached by phone at 515-371-6077; by email at gordon@gordonfischerlawfirm.com; and through his website at www.gordonfischerlawfirm.com.

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