The following is an excerpt from Church & Clergy Tax Guide 2011 by Richard R. Hammar, J.D., LL.M, CPA:
Gifts of stock can provide donors with a double tax benefit. First, they may be able to claim a charitable contribution deduction in the amount of the current market value of the donated stock. That is, they can deduct not only the original cost they paid for the donated shares but also the value of any increase in the value of those shares. Second, donors avoid paying taxes on the appreciated value of the donated stock.
Example. Bob purchases 100 shares of ABC stock at a cost of $1000 in 2004, and he donates these shares to his church in 2011 when their value is $3000. Subject to the limitations discussed later in this section, Bob would be able to deduct the full $3000 in market value, and he would not have to pay capital gains tax on the $2000 gain in the value of the stock.
Many church members own stock that has appreciated in value. The greater the amount of appreciation, the more the capital gains tax the shareholder will face if the stock is sold. But this tax can be avoided if the member donates the stock to his or her church. And remember, the church pays no capital gains tax when it sells the stock, so the entire amount of the gift furthers the church’s mission.
Note: The excerpt notes limitations that are discussed later in the book. These limitations refer to overall deduction limits based on the donor’s annual income.
In order to contribute stock to RRCB, there are three easy steps:
- Contact your broker to arrange the transfer. Be sure to indicate that you want to transfer shares, and not to sell and give cash.
- Shares should be transferred to the church’s Scottrade account. (Contact the Church Administrator for account information.)
- Call or email the Church Administrator to notify him that the stock has been transferred and who the stock is coming from.