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Friends Feature: Making a Charitable Contribution to the Woodman's Center Using Appreciated Stocks


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The Friends of the Woodman's Sports and Convention Center has been making remarkable strides in their fundraising campaign, recently achieving noteworthy milestones. Our diverse and innovative approach to generating funds now includes the option for donors to contribute gifts of stock.


In this Friends Feature, Samantha Guthrie, an LPL Financial Advisor at Johnson Financial Group, has expertly outlined how donating to charitable campaigns, such as those run by the *Friends of the Woodman's Center, can be a flexible, tax-efficient way for supporters to give. We hope this will provide a better understanding of the potential financial benefits for donors as well.


Making a Charitable Contribution

by Samantha Guthrie, AIF®, CWS®

LPL Financial Advisor

AVP, Johnson Financial Group Financial Advisors


Why sell shares when you can gift them? If you have appreciated stocks in your portfolio, you might want to consider donating those shares to charity rather than selling them.


Donating appreciated securities to a tax-qualified charity may allow you to manage your taxes and benefit the charity. If you have held the stock for more than a year, you may be able to deduct from your taxes the fair market value of the stock in the year that you donate. If the charity is tax-exempt, it may not face capital gains tax on the stock if it sells it in the future.(1)


Keep in mind this article is for informational purposes only. It's not a replacement for real-life advice. Make sure to consult your tax and legal professionals before modifying your gift-giving strategy.


There are several reasons to consider donating highly appreciated stock to a tax-exempt charity. For example, you may own company stock and have the opportunity to donate some shares. There also are potential tax benefits to consider if you donate appreciated securities that you have owned for at least one year.


If you sell shares of appreciated stock from a taxable account and subsequently donate the proceeds from the sale to charity, you may face capital gains tax on any gain you realize, which effectively trims the benefit of a cash donation.(1)


When is donating cash a choice to consider? If you provide the charity with a cash gift, there may be some limitations. Cash gifts are generally deductible up to 50% of adjusted gross income. As an example, if a donor in the top 37% federal tax bracket gives a 501(c)(3) non-profit organization a gift of $5,000, the net may be $3,150 with $1,850 realized in tax savings. A donor should also need to consider state taxes in addition to federal.(2)


If you donate shares of depreciated stock from a taxable account to a charity, you can only deduct their current value, not the value they had when you originally bought them.(1)


Remember the tax rules for charitable donations. If you donate appreciated stock to a charity, you may want to review IRS Publication 526, Charitable Contributions. Double-check to see that the charity has non-profit status under federal tax law, and be sure to record the deduction on a Schedule A that you attach to your 1040.(3)


If your contribution totals $250 or more, the donation must be recorded– that is, the charity needs to give you a written statement describing the donation and its value and whether it is providing you with goods or services in exchange for it.(4)


If your total deduction for all noncash contributions in a tax year exceeds $500, complete and attach Form 8283 (Noncash Charitable Contributions) to your 1040 when filing. If you donate more than $5,000 of property to a charity, you must provide a letter from a qualified appraiser to the charity (and by extension, the IRS) stating the monetary value of the gift(s).(4)


Gifting cash or other assets to an organization is a wonderful opportunity. But keep in mind that tax rules are constantly being adjusted, and there's a possibility that the current rules may change. Make certain to consult your tax and legal professionals before starting a new gifting strategy.


If you have made the determination that gifting appreciated securities is appropriate for you, please contact your financial advisor to determine which security(ies) you would like to gift and the number of shares. You can reach out to the organization to whom you would like to gift the shares to obtain the relevant brokerage account number for the organization and something called a DTC number that identifies the broker-dealer with whom they hold their account. This information can be provided to your advisor, who will then draft a stock gift form for you to sign. The security(ies) are then transferred to the charitable organization to sell, likely tax-free, and utilize for their needs.


If you'd like more information on how to gift stock to the Friends of the Woodman's Center or to donate in another way, please contact your financial advisor or the Friends at info@woodmanscenter.com.


Together We Can

The Friends invite everyone who believes in this project to join us in our mission. Whether it's by gifting stock, making a direct monetary donation, sponsorship or pledge, or even spreading the word about our campaign. Every contribution helps us come one step closer to our goal. Your involvement will make a significant difference and help transform the Woodman's Center into a venue that truly serves and elevates our community.


Disclosures:

(1) Forbes.com, December 1, 2020

(2) IRS.gov, December 7, 2020

(3) IRS.gov, February 18, 2021

(4) IRS.gov, March 12, 2021


The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Copyright 2023FMG Suite.


The LPL Financial registered representatives associated with this blog post may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.


Your Bank ("Financial Institution") provides referrals to financial professionals of LPL Financial LLC ("LPL") pursuant to an agreement that allows LPL to pay the Financial Institution for these referrals. This creates an incentive for the Financial Institution to make these referrals, resulting in a conflict of interest. The Financial Institution is not a current client of LPL for advisory services.



Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Johnson Financial Group and Johnson Financial Group Financial Advisors are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Johnson Financial Group Financial Advisors, and may also be employees of Johnson Financial Group. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Johnson Financial Group and Johnson Financial Group Financial Advisors. Securities and insurance offered through LPL or its affiliates are:


Not Insured by FDIC or Any Other Government Agency

Not Bank Guaranteed

Not Bank Deposits or Obligations

May Lose Value


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*Friends of the Woodman's Center is not affiliated with LPL Financial or Johnson Financial Group Financial Advisors

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