Donate Stocks, Bonds, or Securities
WHY GIVING STOCKS TO COTS MAKES SENSE
A gift of appreciated stock is a sensible and cost-effective way to support COTS. By donating appreciated stocks, bonds or securities, you can avoid paying capital gains tax on the appreciation, receive a tax deduction on the full value of the gift, and support COTS at a lower cost.*
That’s why many individuals prefer to contribute stock rather than writing a check.
Here’s how it works:
John and Mary Jones usually make an annual gift to COTS of $1,000. They would like to increase their gift and want to do so in the most economical manner. John and Mary spend some time reviewing their assets and find they have 150 shares of XYZ stock they purchased five years ago for $600. The shares are now worth $1,500. John and Mary review the following options and decide to give COTS their XYZ shares. They are able to increase their gift by 50% and are entitled to a charitable deduction for the full fair market value of the appreciated securities rather than the original cost. Additionally, they do not have to pay capital gains tax.
Whenever income tax deductions for gifts to publicly supported charitable organizations are claimed for gifts of long-term capital gain property, the total of such deductions that can be used in a particular year is limited to 30 percent of the donor’s adjusted gross income, rather than the 50 percent annual limitation for cash gifts. For most donors, the total deduction is typically all usable, since any unused deduction can be carried forward for five years.
We advise donors to consult with their accountant or tax attorney to ensure that they are able to take full advantage of their tax deductions.
To deduct gifts of appreciated stocks, bonds or securities at their current value, you must have owned them for at least a year and a day. The transfer to COTS must occur before December 31 in order to be considered for the current tax year.
WHAT ABOUT STOCKS THAT HAVE DECREASED IN VALUE?
It’s usually best to sell the assets and give COTS the cash. This way you create a capital loss for income tax purposes and you are also able to deduct the amount of your charitable gift.
WHAT WOULD COTS DO WITH MY GIFT OF STOCK?
When COTS receives shares of stock, our Board of Directors has the option of selling the shares at current prices or holding on to the stock in order to receive dividend income or to sell it when the price goes up. The COTS Board works with a qualified financial advisor to ensure that every gift is maximized.
I WANT TO GIVE COTS SOME STOCK. HOW DO I PROCEED?
Talk to your financial advisor about how much you want to give and the timing of your gift. Your advisor can help you determine what stocks are best and make the transfer for you. Make sure your advisor has the following information:
Our account is with: Charles Schwab and Company, Inc.
Account name: Committee On Temporary Shelter
Account #: 2451-4179
DTC #: 0164, code 40
It’s important that your broker contact COTS to make sure we know about your transfer. This is important because your name will not be included in the wire transfer and COTS needs to send you a tax receipt for your records!
If you hold the actual stock certificate, mail the unendorsed certificate to COTS via registered mail, or drop it off at our office in Burlington. Mail a signed stock power form to COTS in a separate envelope (COTS has forms on file if you need one). These two documents must be in separate envelopes. Your gift is complete as of the date postmarked on the second envelope. Finally, it is also very important that you receive and retain the confirmation of your transfer as proof of your tax deduction claim.
*For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income tax include federal taxes only. Individual state taxes and/or state law may impact your results.