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gifts of securities

The power of a gift of securities: An example

Ms. Jones, who is in the 31 percent tax bracket, owns securities currently valued at $30,000, which she purchased several years ago for $3,000. She contributes the securities to the UW-Eau Claire Foundation and realizes a $30,000 charitable deduction, which saves her $9,300 in income taxes (31 percent of $30,000).

Ms. Jones also avoids the capital-gain tax on her $27,000 paper profit. This means an additional savings of $5,400 (20 percent of $27,000). So the actual cost to Ms. Jones of her $30,000 gift of appreciated securities is only $15,300 ($30,000 less $9,300 less $5,400).

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