Donating stock is a great way to benefit the Church while also eliminating capital gains! In the example below, John is looking to impact God’s Kingdom through First Dallas in greater ways than his current giving.
John has stock he purchased for $25,000 that is now valued at $50,000. John wants to give a gift to First Dallas, so he sells the stock for $50,000, and now owes capital gains taxes of approx. 23.8%, or $5,950. After taxes, John gives a gift in the amount of $44,050.
John has stock he purchased for $25,000 that is now valued at $50,000. John wants to give a gift to First Dallas, so he donates the stock directly to First Dallas which allows First Dallas to sell the stock without the requirement of paying capital gains. With this scenario, First Dallas receives a gift in the amount of $50,000.
For more information, or to find out next steps, contact us at email@example.com, or call the Office of Finance and Accounting at 214-969-2405.
A gift of your appreciated real property (such as your home, vacation property, vacant land, farmland, ranch or commercial property) can make a great gift to First Dallas.
How you make a gift of real property:
Your real property may be gifted to First Dallas by executing or signing a deed transferring ownership. You may deed part or all of your real property to First Dallas. Your gift will generally be based on the property’s fair market value, which must be established by an independent appraisal.
Gifts of Real Estate Example:
Mike, a recently retired CEO of a publicly traded company, was ready to downsize. His financial advisor suggested an interesting option that would not only simplify his lifestyle but also help fund Mike’s passion to support First Dallas during his retirement. Mike had purchased a house at the beach years ago, and it had turned out to be a very good investment. Over time, it had appreciated, and Mike’s financial advisor suggested that he use the house to provide funds for his philanthropic plans, especially since his income in retirement would be reduced.
Instead of selling the house, now valued at $1.5 million, and contributing the proceeds in cash, Mike’s advisor suggested a better way: by deeding the asset over to First Dallas, Mike would be able to take a tax deduction of the fair market value of the house, based on a qualified appraisal, and eliminate his capital gains tax on the appreciation.
First Dallas was able to sell the asset, and apply the full $1.5 million value of the house to furthering its mission of reaching the world for Christ. As a result, Mike was able to dedicate $261,800 more to First Dallas than if he had contributed the after-tax proceeds from the sale of his house.
A vehicle can make a great gift to First Dallas, and a great way to reduce taxes for those who itemize.
How you make a gift of a vehicle:
Your vehicle may be gifted to First Dallas by signing the title and transferring ownership. Your gift will generally be based on the property’s fair market value, which is established by either the sale of the vehicle, or by an independent appraisal.
Gifts of vehicles Example:
Jim is looking to give to his church above and beyond his regular tithe, yet does not have the available cash to do so. He does have a collection of cars that he no longer has time to enjoy. Rather than go through the process of selling those vehicles and dealing with all that is associated with a sale, Jim can donate the vehicles directly to the church and take the tax benefit. The church will handle the sale and receive the proceeds.
Many executives and entrepreneurs find that their most appreciated assets come in the form of non-cash assets (privately held C- and S-Corp stock, limited partnerships or LLC interests), often with a low cost basis and significant current market value, resulting in large capital gains taxes when sold.
Contributions of privately held stock to First Dallas are generally deductible, for those who itemize, at fair market value on the date of contribution—as determined by a qualified appraisal—whereas such contributions to a private foundation are generally deductible at the lower of cost basis or market value.
For gifts of privately held stock or LP/LLC interests, donors must obtain a qualified appraisal of the shares to substantiate the charitable deduction claimed, for those who itemize.
Donate Shares of Privately Held Company Example:
An executive at a privately held company would like to convert some of her concentrated holding in long-held, highly appreciated shares of the company into cash to fund her philanthropic activities. Her company has a buyback program in place for shares donated to charity. She is a board member of several nonprofit organizations sponsoring programs for disadvantaged youth and these organizations are not able to accept non-cash contributions. She wishes to minimize taxes in order to maximize her gifts to charity.
The executive decides to establish a donor-advised fund account and to fund the account with shares of the company stock. The donor-advised fund takes ownership of the shares and tenders them back to the company as part of the charitable buyback program. The transaction closes within a week, and the executive begins to recommend investments and grants to charities of her choice. She claims a fair market value deduction (as determined by a qualified appraisal).
If you have mineral interests that you are having trouble managing, let First Dallas and their partners help! In the example below, the Owens family receive needed income from mineral interests, yet want to leave an impact with First Dallas.
The Owens own a ranch in New Mexico, and have entered into an agreement with an oil and gas company which led to a land lease with the company and their receipt of a royalties in the future profits. They have been passionate supporters of First Dallas for many years. In looking for ways to benefit the Kingdom beyond their usual giving, but still needing income, they let our partners at HighGround manage their mineral asset for them. Upon their passing, the interest would be passed on to First Dallas, and the Owens could be giving to the Church and helping to reach the world for Christ long after they are gone!
Donating a Coin Collection
Donating from your collection instead of your bank account is ultimately most tax beneficial.
You may deduct the full ‘Fair Market Value’ of your collectibles as a charitable contribution. This means that you do not have to realize any increase in value, since the time of purchase, as capital gains.
The definition of Fair Market Value is “the price a collector would pay if buying the material for his own collection”, not the lower price a dealer might offer if buying for resale.
Also, proper substantiation of the donation is critical, and this may include providing an appraisal of your item(s). If you donate collectible items with a collective value of $5,000 or more, you’ll need a qualified appraisal, and if the collective value is $20,000 or above, a copy of the qualified appraisal must be attached to your tax return. If an individual item is valued at $20,000 or more, you may also be required to provide a photograph of the donated collectible item with your tax return.
Donating appreciated property is doubly beneficial because you can both enjoy a valuable tax deduction and avoid the capital gains taxes you’d owe if you sold the property. The extra benefit from donating artwork comes from the fact that the top long-term capital gains rate for art and other “collectibles” is 28 percent, as opposed to 20 percent for most other appreciated property. The first thing to keep in mind if you’re considering a donation of artwork is that you must itemize deductions to deduct charitable contributions. Something else to be aware of is that most artwork donations require a “qualified appraisal” by a “qualified appraiser.” If you own both the work of art and the copyright to the work, you must assign the copyright to the charity to qualify for a charitable deduction.
Donations of artwork to a public charity, such as a museum or university with public charity status, can entitle you to deduct the artwork’s full fair market value. If you donate art to a private foundation, however, your deduction will be limited to your cost. For your donation to a public charity to qualify for a full fair-market-value deduction, the charity’s use of the donated artwork must be related to its tax-exempt purpose.
If, for example, you donate a painting to a museum for display or to a university’s art history department for use in its research, you’ll satisfy the related-use rule. But if you donate it to, say, a children’s hospital to auction off at its annual fundraising gala, you won’t satisfy the rule.
The most popular means of asset giving is leaving a gift to the church in your estate plan. Including First Dallas in estate plan by means of your Will or Living Trust, is a way that you can make a statement after your passing of what really mattered to you.
Including language as simple as, “I give, devise and bequeath to the First Baptist Church of Dallas, Texas, located in Dallas, Texas, ______ (percent of your estate, dollars, property, securities, etc.).”
First Dallas can help you have your Will drafted often at no cost to you! For more information, contact us at firstname.lastname@example.org.
First Dallas is also able to handle gifts of grain, historical artifacts, gold and precious metals, and a variety of others gifts. If you have something you want to give to the Church, let us know at email@example.com.
Please contact Guy Shafer at 214.969.7722 for assistance or to make an appointment.