|
The Story of Kris - Gifts of Stock Instead of Cash: Smart Assets to Give
Kris invested at an early age in stocks, and her portfolio includes some that have increased significantly in value. She is considering making a charitable gift of $50,000. What would be the net cost of a $50,000 gift of cash if she itemizes deductions? Because she is subject to a 35% income-tax rate, tax savings would be $17,500 ($50,000 x 35%) and the net cost would be $32,500. Suppose, however, that instead of cash she contributes stock valued at $50,000 that she purchased years ago for $20,000. In addition to the $17,500 tax savings from the deduction, she would avoid the capital-gain tax from the sale of the stock. That tax would be $7,140 ($30,000 of gain multiplied by her 23.8% capital-gain tax rate), and tax savings would total $24,640. This means she can contribute $50,000 at a net cost of only $25,360. |
