Securities

Gifts of appreciated stocks or bonds have the same positive benefit to Peter & Paul Community Services as a gift of cash—however, a gift of securities is often more beneficial to you, the donor, than a gift of cash.

With a gift of marketable securities which have been held longer than one year, you receive a charitable deduction of the full fair market value (FMV) of the securities. The FMV is determined by the average of the high and low sales prices of the stocks on the gift date. You may apply the gift as a deduction up to 30% of your adjusted gross income (AGI) in the case of securities, with the same five-year carry-over provision—and avoid gift and estate taxation, as with gifts of cash. In addition, you avoid paying any taxes on capital gains on the appreciation in the value of the securities. This can be a major benefit to you if you have held securities over a number of years and if they have grown in value.

Example: Mr. Jones has a $90,000 AGI this year. He donates long-term (held for over a year) stocks this year. He paid $10,000 several years ago for the stocks and they are now worth $50,000. On the gift date, the stock traded on the New York Stock Exchange at a low of $49,000 and a high of $51,000. Whether Peter & Paul Community Services sells the stock or not does not change the valuation on the gift date. He may deduct $27,000 this year and carry over $23,000 to deduct next year. He also avoids taxes of capital gains he would have had to pay on the $40,000 appreciation, or growth, in the stocks if he had sold them himself.