https://www.ucda.com/appreciated-securities/
Appreciated Securities
Given the realities of the financial marketplace, you are no doubt constantly reviewing your investment portfolio. Despite volatility, you may have realized a net gain in the value of certain stocks and mutual funds. You’re pleased with those returns, but you are also aware that if you sell the securities, you could face unwanted capital gain taxes. What should you do?
Many donors choose to make gifts in the form of common stock or other publicly traded securities. Substantial tax benefits are realized by transferring appreciated securities held long-term (owned by the donor for more than one year prior to the gift) to the UCDA Foundation. By making such a gift, the donor is entitled to a federal income tax deduction for the full fair market value of the security, subject to applicable limitations. By contributing the security instead of selling it outright and contributing the proceeds of the sale, the donor avoids capital gains tax liability. This means you receive a double tax benefit.
Example: You have stock with a current market value of $5,000. It originally cost you $3,000 (the “cost basis” of the stock). If sold, you will realize an untaxed capital gain of $2,000. If you have owned the stock for more than one year, your capital gains tax rate would be 15% of the $2,000 (=$300). By making a gift of this stock, you may claim a charitable deduction of $5,000 that would generate a net tax savings of $1,400 ($5,000 multiplied by an assumed marginal tax rate of 28%). When the $1,400 is combined with capital gains tax savings of $300 (=$1,700), the gift of $5,000 actually costs you only $3,300 ($5,000 - $1,700 = $3,300).
IT’S EASY TO MAKE A GIFT OF SECURITIES
There are three easy ways to give securities to the UCDA Foundation:
- Electronic transfer/Wire transfer
- If your broker/or banker holds the stock in street name
- If you hold the certificates
See specific information on the three ways below.
METHOD 1: Electronic Transfer (Wire Transfer)
It is very important that the donor or their broker notify the UCDA Foundation of the pending transfer. The UCDA Foundation must know the name of the stock, the number of shares, the name of the donor, and the designation of the gift in order to credit the gift properly. Please contact Tadson Bussey, UCDA Foundation executive director at 615-459-7898 with this information, or use the Gift of Stock Transfer Form (stock_transfer_form.pdf).
Stocks can be transferred electronically with the following information:
Official Name of the Foundation: UCDA Foundation
Tax Identification No.: 32-0147631
Receiving Brokerage Firm: Morgan Stanley
Attn: Michael S. MacIntyre
333 John Carlyle Street, Suite 650
Alexandria, VA 22314
703-548-8282
Account No.: Contact the UCDA Foundation for the Account Number
Following IRS regulations, valuations of the gift will be based on the date of the stock transfers into the Foundations account.
METHOD 2: If your broker (or your banker) holds the stock in street name
1. Notify UCDA Foundation of impending transfer using the use the Gift of Stock Transfer Form (stock_transfer_form.pdf).
2. Instruct your broker in writing of the specific shares that you wish to donate to the UCDA Foundation. See Sample Stock Transfer Letter (stock_transfer_sample_letter.pdf).
3. Have your broker call the UCDA Foundation at 615-459-7898 to receive instructions on the disposition of the donated shares. Stock valuation will be the date the transferred shares reach the Foundations account. For this reason, it is imperative that your broker act in an expedient manner. A stock gift is complete only when the actual transfer takes place.
METHOD 3: If you hold the certificates
1. Send unendorsed certificates by registered mail to:
UCDA Foundation
199 Enon Springs Road West, Suite 400
Smyrna, TN 37167
615-459-7898
615-459-5229 fax
2. By separate first-class mail, send a stock power signed exactly as your name appears on the unendorsed certificate, with your signature guaranteed by a bank officer. Stock power forms can be obtained by your broker or banker.
3. Include a letter indicating for what purpose the gift is being given. Stock valuation date will be the postmark date on the envelope containing the stock power.
If the certificate is made out in the name of UCDA Foundation, valuation will be made as of the issue date recorded on the certificate.