Year-End Stock Giving Checklist

Giving away stock is a great way to give, and positive returns in the markets have caused many donors to start looking at this strategy harder. Here is my stock giving checklist, answering the most common questions I receive for stock giving.

Selecting the Stock

1. Look at stocks that have been held more than one year. In order for you to deduct the fair market value of the stock, the shares need to be considered “long term” (held more than 1 year). For stocks held one year or less, you can only deduct what you paid for them.

2. Look for the most appreciated stocks. When deciding which stocks are the best candidates to give, look for those that have had the highest increase in value since you’ve purchased them. When giving appreciated stock, the full value can usually be deducted (see above point) without recognizing any of the capital gains. Let’s say you would like to give $100, and you have two stocks worth $100: Stock A was purchased at $30 and Stock B at $80. By giving the Stock A, you can still deduct the $100, but you never have to recognize the $70 worth of gain ($100-$30). If you have stocks that have depreciated, most financial planners recommend you sell them first, then give the cash.

Sending the Donation

Once you’ve selected the stocks, the transaction is really two simple steps. Using a “donor advised fund” — like Servant’s Giving Funds — allows you to give in one transaction, then distribute easily to multiple organizations at a later date.

1. Deliver a “Letter of Authorization” to your broker. Only you can initiate a transfer from your account, so your broker will need to receive instructions from you (usually signed). You will need to include the nonprofit’s account information. For stock gifts to Servant, we’ve created this form to help you get all the needed information to your broker. It is imperative that you give your broker time to complete the transaction in this year. Some offices require several business days to complete transactions.

In order to get a tax deduction in 2010, the stocks have to be received by the nonprofit’s brokerage account no later than December 31.

2. Notify your charity of the gift. Once the gift has been initiated, notify the nonprofit that the stock is coming, noting any recommendations for its use. For gifts to Servant, we prefer you use the form linked above to let us know about the gift. At minimum, we will need to know (a) your name/address for the receipt, (b) number/type of shares gifted, (c) the donor advised fund toward which you’re giving.

After the Gift

1. Receive a receipt from the charity. You will need to retain this for your tax returns. Receipts from the foundation will include the total mean value of the gift on the day it was given. This price is the average of the highest and lowest traded prices for that day. Work with your tax advisor to determine the necessary reporting on your tax return. IRS Form 8283 will be required if your noncash gifts for the year are above $500.

2. Give the proceeds! This is the best part of the entire process, sending the money on to nonprofits! For foundation members, log on to your fund at or call our office at (913) 310-0279 to schedule grants out of your donor advised funds!

There is still time to give a 2010 stock gift! Always make sure you consult your financial planner and tax advisor for advice tailored to your individual situation.

Posted in For Advisors, For Givers. Tags: , , , . Comments Off on Year-End Stock Giving Checklist
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