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Stocks and Bonds

Has a stock that you purchased in the past increased in value? If so, a gift of stock or other appreciated securities (e.g., bonds or mutual funds) rather than cash to Massachusetts General Hospital is a tax-saving strategy worth considering.
By making a gift using appreciated securities, you can completely avoid capital gains taxes. You can also take an income tax charitable deduction for the fair market value of the shares given to Mass General. Please be sure to follow IRS rules to benefit from these generous tax savings.

Best Practices for Appreciated Securities

Use stocks, bonds or mutual funds that you’ve owned for at least one year and that have appreciated in value.

Transfer the appreciated securities directly to Mass General — don’t sell them. By donating the shares to charity, you’ll avoid paying tax on the capital gain.

Mass General, in turn, will sell the shares, and no taxes will be due on the gain. That’s because public charities are tax exempt.

You can take an income tax charitable deduction of up to 30% of your adjusted gross income for the fair market value of the shares transferred. That will save you even more in taxes if you itemize deductions.

You can carry forward any unused deduction for an additional five years.


Understanding Your Savings

The chart below shows how you might save substantial taxes by making a gift of appreciated securities.

For example, if you make a cash gift of $20,000 to Mass General, you could take the full amount of the gift as a charitable tax deduction, resulting in an income tax savings of about $7,400. Alternatively, if you make a $20,000 gift to Mass General with appreciated stock, you could still claim the full amount of the gift as a charitable tax deduction. However, you’d also save the capital gain tax on the stock’s growth in value since you acquired it.

In this chart, the capital gain savings is based on a value increase of $15,000. By using stock for your gift, you could save an additional $3,000 in taxes. Note: Your tax savings will vary based on your tax bracket and capital gain tax rate.

- Cash Gift Stock Gift
Gift Value $20,000 $20,000
- Cash Gift Stock Gift
Income Tax Deduction $20,000 $20,000
- Cash Gift Stock Gift
Income Tax Saved (37% Rate) $7,400 $7,400
- Cash Gift Stock Gift
Purchase Price - $5,000
- Cash Gift Stock Gift
Increase in Value ($20,000 – $5,000) - $15,000
- Cash Gift Stock Gift
Tax Avoided on Gain (20% Rate x $15,000) - $3,000
- Cash Gift Stock Gift
Total Tax Savings ($7,400 + $3,000) $7,400 $10,400

Giving Options

There are two primary ways to use your appreciated securities to support Mass General while reducing your capital gains tax:

Give outright: For an immediate impact, you may transfer shares of one or more publicly traded securities, such as stocks, bonds and mutual funds, to Mass General.

Establish a life income gift: You may make a gift of appreciated securities and receive payments for life.

We’re Here for You

The Office of Planned Giving is available to answer questions and provide additional information to share with your family and advisors.