Creative Giving Ideas- Week 3
Appreciated Asset Gifts
The churches, associations, institutions and agencies of the Kentucky Baptist Convention and Southern Baptist Convention are making a difference for the Kingdom of God in our state, nation and around the world. They are worthy of significant and sacrificial support that will enhance and undergird their missions and ministries.
Perhaps you would like to make gifts above what you give out of income as tithes and offerings to provide on-going support to one or more of these causes, but you may be concerned that such gifts could affect your financial security and that of your family. This lesson focuses on using assets that have appreciated in value for making “above and beyond” gifts to support the ministries that are important to you.
Scripture References: Luke 16:10-12; 1 Timothy 6:9.
Please read these passages in your Bible now.
What are the Benefits of Using Appreciated Assets to Make Charitable Gifts?
Using appreciated assets such as stocks, bonds, mutual fund shares, or real estate to make gifts to charity during your lifetime provides multiple advantages—a charitable income tax deduction based on the current market value of the asset (assuming you have owned it for at least a year) and avoidance of all or a portion of the capital gains tax that would be incurred if you sold the asset.
How Does Giving An Appreciated Asset Compare to Using Cash for My Gift?
Using an appreciated asset to make your gift to charity can result in a lower after-tax cost to make your gift than if you use the same amount of cash to make your gift. In essence, the amount coming out of your pocket may be less if you use an appreciated asset.
Example: Martha wants to make a gift of $10,000 to her church’s building program. She is trying to decide if she should use some stock that she purchased several years ago for $5,000, which has a current market value of $10,000 or her $10,000 certificate of deposit, which matures soon. The value of her charitable gift, whether she uses the stock or the cash, is $10,000 that will save $1,500 in income taxes (IF she is in the 15% income tax bracket). If Martha uses the stock to make her gift, she also saves $750 in capital gains taxes that she would incur if she sells the stock (15% of the $5,000 of capital gains that would be incurred if she sold the sold). Therefore, the after-tax (out of pocket) cost of making the stock gift is only $7,750 vs. $8,500 if she uses the cash. See the example below.
Gift of Stock vs. Gift of Cash
Value of Gift $10,000 $10,000
Income Tax Savings ($1,500) ($1,500)
Capital Gains Savings ($ 750) —
After-Tax Cost $ 7,750 $ 8,500
Prayer Focus: Take time now to ask God if you should consider making an appreciated asset gift to your church or other Baptist cause.
Next Week: Life Income Gifts
For more information, please call us at (502) 489-3533 or toll free in KY at 1-(866) 489-3533
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.