Has a stock that you purchased in the past increased in value? If so, a gift of stock or other appreciated securities rather than cash to Massachusetts General Hospital is a tax-saving strategy worth considering.
By taking advantage of the tax laws, you will find that you can make a generous gift to Mass General.
With the recent tax law changes, Congress left untouched one of the most significant tax benefits for charitable giving. By making a gift using appreciated securities — stock, bonds or mutual funds — you can completely avoid capital gains taxes and take an income tax charitable deduction for the fair market value of the shares given to Mass General. It’s important to follow the 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 have appreciated in value.
- Transfer the appreciated securities directly to Mass General – don’t sell them. You avoid paying tax on the capital gain when you give the shares to charity.
- 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 for the fair market value of the shares transferred. This can be up to 30% of your adjusted gross income. 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 gift of $20,000 to Mass General with cash, you may take the full amount of the gift as a charitable tax deduction, resulting in an income tax savings of approximately $7,400. Alternatively, if you were to make a $20,000 gift to Mass General with appreciated stock, you would still claim the full amount of the gift as a charitable tax deduction. However, you would also save the capital gain tax on the stock’s growth in value since you acquired it. In the graphic below, the capital gain savings is based off 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.
By taking advantage of the tax laws, you will find that you can make a generous gift to Mass General.
Support the life-saving initiatives at Mass General and reduce your tax bill all at the same time. Call us at (617) 643-2220 or email mghdevpg@partners.org for creative, tax-advantaged gift ideas and techniques.
