Tip of the Day
Same Gift, Better Deduction
We've told you that a donation using appreciated securities produces a charitable deduction in the amount of the full, fair market value of the stock, with no liability for capital gains -- a great tax benefit!
So why give the Red Cross cash if you could give stock? Because you may be able to take advantage of one tax benefit that a gift of cash offers.
A $10,000 gift of cash produces the same deduction as a $10,000 gift of appreciated securities or other assets. However, the IRS allows you to claim the deduction for the cash gift up to 50 percent of your adjusted gross income ("AGI" -- the figure at the bottom of the first page of Form 1040. See Glossary for full definition). The gift of stock may only be claimed up to 30 percent of AGI.*
So if this will be a high earnings year for you, you will be able to offset more taxable income with the deduction from a cash gift.
We can help you determine which gift asset will work harder for you.
* Deductions in excess of the percentage limits aren't wasted -- the balance may be claimed during the five years after your gift is made.