This year, when you “take stock” of your financial affairs, it may be more important than ever to review your investments if you are considering making a charitable contribution the church. A contribution of a stock, bond or other security can be made towards your pledge to support our annual operating budget, as a special gift to First Unitarian Universalist Church of Richmond, Virginia, or as a contribution to be invested in the First Unitarian Universalist Church of Richmond, Virginia, Endowment Fund.
More and more people have invested in the stock market and other securities over the past few decades. Several of these investments have dramatically increased in value while others may have declined. Certain tax law provisions and market conditions, combined with your generosity, may make a contribution of a stock, bond or other security a win-win situation for both you and the church. Here are three scenarios:
- Income and capital gain tax savings generated by a gift of stock of mutual fund shares can dramatically reduce your after-tax cost of giving. When you sell appreciated assets, you will be taxed on the gain in value. When the church sells them, there is no tax on the transaction because First Unitarian Universalist Church is tax exempt. (To take a deduction for gifts of securities or other assets at their current value, you must have owned them for at least one year.)
- You may have a security which you believe has run its course and is unlikely to grow in the future and may even decrease in value. You want to sell it but the sale may result in a hefty capital gains tax liability. One possibility to deal with this dilemma is to make a “balanced sale” of the investment. Under this alternative, you make a gift of part of your investment while selling the remainder. In consultation with your financial advisor, you can determine the gift amount that will offset the gain from the sale of the remainder of your securities.
- If the value of the securities you would like to give is less than their original cost, it may be better to sell them and make a charitable gift using the cash proceeds. You may then be able to claim tax benefits for both the capital loss and the charitable gift, effectively deducting more than the current value of the assets.
- Tremendous benefits can result from taking the time to carefully plan your gifts. Giving securities to the church is one of the ways you can combine your charitable giving goals with effective estate and financial planning. For more information, please consult with your financial advisor.
A CAUTION TO THE DONOR:
When making a large pledge to it is always advisable that you speak with your tax advisor or financial planner.