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One of the benefits of living the cheap life is that you are able to give much more to charitable organizations. In fact if you are really smart about it, you can structure it so Uncle Sam foots most of your donation and your favorite charity or church gets the full benefit. The cheapest way I know to donate is by giving up some of that heavily appreciated stock. It lets you give much more than you would in cash and costs you a lot less.
To get an understanding of why you should consider donating appreciated stock instead of cash, requires a basic grasp of the tax code. When you gift anything, you get to deduct the fair market value as an itemized deduction. So if you bought $3,000 worth of Apple a few years back and its now worth $15,000, the IRS doesn't care what you bought it for, they only care what its worth the day you gift it. In this case, your $15,000 worth of stock is worth the same as if you wrote a $15,000 check.
Now if you have a short-term gain, Uncle Sam isn't so generous. Unfortunately, the government will only let you take the fair market value less the gain which is likely your cost. In that case, gifting the stock isn't much better for you than cash, but it does work well for your charity.
In both cases you have to itemize your deductions to have any benefit, but if you live in a high cost state or have a lot of property taxes, you will likely qualify.
By historical standards, current marginal tax rates are extremely low. Did you ever wonder why so many rich people are so generous? Well the tax code didn't hurt them in making the decision. As recently as 1980, the top tax rate was a staggering 70% and if you think gifting appreciated stock makes sense at a 28% tax rate, at 70% it's a no brainer. I can't imagine how many nonprofits were setup for the sole purpose of moving this money around. I know for a fact that many wealth people got buildings named after them for just this reason: Give $5MM of appreciated property and you really wern't "giving" up that much, Uncle Sam was!
Your brokerage can easily handle this transaction. Just find out the name your charity's brokerage and ask him for the squirrels' account name and number and your broker can give you a form to fill out. Usually there is a nominal transfer fee of about $15 to $20. Make sure you get a record of the transaction because you'll need it as supporting documentation at tax time.
So next time you get the urge to whip out a check and write it out to your favorite charity, stop for a moment and take a look into your brokerage account and gift some of your winners and let Uncle Sam pick up some of the tab.
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