Publicly Traded Securities and Closely-Held Stock

Appreciated Securities

Giving appreciated securities is one of the most popular methods of giving because they can provide so many significant tax benefits to a donor and can be used to establish a fund or add to an existing fund.

Donors who contribute long-term appreciated securities to the Foundation get a triple tax benefit:

• An income tax deduction
• Avoidance of capital gains tax, and
• Avoidance of estate tax

The deductible amount for gifts of appreciated securities depends in part on whether the stock was held by the donor for more than one year.

• For gifts of appreciated securities held one year or less the donor can deduct the cost basis up to 30% of adjusted gross income. Any excess may be carried over for 5 years.
  • For gifts of appreciated securities held more than one year, the donor may:
    Deduct the full fair market value up to 30% of adjusted gross income with a 5 year carryover, or
  • Elect to deduct the cost basis of the stock up to 50% of the donor’s adjusted gross income with a 5-year carryover. This option may be advantageous when the assets are not highly appreciated.

You can also give securities with a bequest in your will or living trust.
Securities can be used to establish a Charitable Gift Annuity.

Closely-held Stock

Closely-held stock can be contributed outright to the Community Foundation and the donor is entitled to a deduction for the appraised fair market value. The donor also avoids the potential capital gains tax on any appreciation.

Subsequent to the gift, Mt. Pleasant Area Community Foundation may sell the stock to the corporation or to other shareholders for cash. There can be no prior agreement between the charity and a potential buyer before the gift is made.