Cash: A Popular Gift
 When most people think of giving to public broadcasting, they think
of making a pledge and writing a check. Cash gifts are convenient for many people and are easily recorded
through canceled checks and receipts. It is important to save all
receipts to assure maximum tax savings.
Non-Cash Gifts: Enjoy More Savings
Some supporters choose to make their gifts
in forms other than cash. Examples include:
- Securities (stocks, bonds, mutual funds)
- Real estate
- Insurance policies
- Retirement plans
- Other items of value (jewelry, paintings, collections, antiques,
automobiles, etc.)
After considering
the properties you own, you may find giving something
other than cash to be an appealing alternative. Giving non-cash
property enables you to help public broadcasting while conserving cash for other
uses and enjoying what may be greater tax savings than those provided by
gifts of cash.
Giving Appreciated Property
If you have non-cash property, such as stocks and mutual funds, that has grown in
value (appreciated) and been held long-term (more than one
year), you can generally enjoy greater tax savings from giving such
property than from giving an equivalent amount of cash. That’s because
a gift of long-term appreciated property lets you bypass capital gains
tax that could be due if you sold the asset. You are also entitled to a charitable deduction
based on the property’s current value, including the “paper profits”
you have earned since you have owned it.
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For example: Barbara is in the highest federal income tax
bracket. She wants to make a $5,000 gift for charitable purposes.
Should she give stocks, bonds, or mutual funds worth that amount,
or should she sell them and give the cash from the sale?
If she gives $5,000 cash, she’ll receive a deduction
for $5,000, saving her $1,750 in taxes. If she gives stock
valued at $5,000 that was purchased years ago for $1,000, she
will achieve the following results:
- A charitable income tax
deduction for $5,000, saving her $1,750 in taxes (just like a
cash gift), plus
- Avoidance of capital gains tax
on the $4,000 increase in value, a $600 savings (15% capital
gain tax rate x $4,000)
All told, the after-tax cost of Barbara's gift of stock worth
$5,000 is just $2,650. Comparing that to the $3,250 after-tax cost
of giving cash, she decides to give the stock and thus make the
same gift to the charity at a savings of almost 20% over the
after-tax cost of the same gift in the form of cash.
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Giving Depreciated Property
If you have stocks or other properties that have decreased in value, you will
normally save more in taxes by selling them and giving the proceeds. You may
be able to claim a capital loss on your tax return. You can also deduct
the cash proceeds you give as a charitable gift. The result can be to
enjoy tax deductions that amount to more than the current value of the
asset.
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