Gifts of Stock: Appreciated Securities

Giving appreciated securities is an easy way to make a gift to the UI Foundation and derive considerable tax benefits. It is almost always a better strategy to give appreciated securities directly to the Foundation, rather than selling them and donating the proceeds of the sale.

In fact, many alumni find that the tax benefits associated with giving to the UI Foundation actually allow them to increase the size of their gift.

Instructions for giving appreciated securities:

• If your stock certificates are held by a bank or a broker
• If you hold the stock certificate(s) yourself

A planned gift consisting of appreciated securities can create exciting opportunities for you. For example, it may create a lifelong income stream that exceeds what you would otherwise have received in dividends. Many donors use securities to establish a stand-alone planned gift, such as a charitable remainder trust.

Securities that have lost value are not usually considered for gift purposes. If you want to take your losses and invest the proceeds into a guaranteed success, however, you can sell the stock, take the capital loss deduction and make a gift to UI Foundation.

Example: Tax benefits of donating appreciated securities

Mrs. Johnson owns 100 shares of appreciated stock currently valued at $50 per share ($5,000). She purchased the stock 15 years ago at a price of $10 per share (100 shares * $10/share = cost basis of $1,000).

• If she gives the stock to the UI Foundation, she can claim a charitable deduction of the full market value of the gift ($5,000). And, since a gift to the Foundation is not a sale, she will not owe any capital gains tax on the transaction.
• If she were to sell the stock herself, she will incur $4,000 in capital gain ($5,000 market value--$1,000 cost basis). After she pays taxes of $600 (the 15 percent capital gains tax rate on the $4,000 gain), her gift to the UI Foundation will be only $4,400.