Securities & Stocks

Gifts of appreciated property are called the best value in charitable giving because there are numerous advantages to making a gift in this way. In addition to a charitable contribution tax deduction, you generally avoid paying capital gains tax on the increased value of the assets.

Factors to Consider


Long term versus short term holdings
Long-term property is property that has been held for longer than 12 months. Property held less than 12 months is considered short-term property. There are significant benefits to gifts of long-term property, including a charitable deduction based on the fair market value of the stock and the ability to avoid paying capital gains taxes. Depreciated stock is an asset that has lost value since it was purchased and generally should not be gifted, as the donor cannot take the loss for tax purposes.

Publicly held or closely held stock
Stock can be either publicly held or closely held. Publicly held stock is traded on an exchange and can be purchased by anyone. It is usually easy to value, with market prices readily available online. Many prices are available in print publications such as the Wall Street Journal.

Closely held stock is typically owned by a few individuals, often family members. It is more difficult to value and is not freely traded. The Madison Area Technical College Foundation accepts gifts of closely held corporation stock on a case-by-case basis.

For charitable gift purposes, either type of stock can be donated, although most gifts are made using publicly traded securities.

Date of gift
When you contribute either certificates or transfer stock from a brokerage account, the date is easy to determine. However, if you elect to have shares re-registered in the name of the Foundation, the date is uncertain due to the time required for the re-registration process.

Valuing the gift – your charitable deduction
When you give long-term appreciated stock that is publicly traded, you receive a deduction for the fair market value. The fair market value is determined by taking the average of the high and the low price on the date of gift, also known as the “mean market value”. Closely held stock usually requires an independent appraisal to determine value. Gifts of appreciated stocks are deductible up to 30 percent of your adjusted gross income in the year of the gift and if the amount of the deduction exceeds that amount, you may carry your remaining deduction forward for up to five years in the future. Check with your financial adviser to help with specific questions.

Claiming your deduction
You must itemize your tax return to claim any charitable deduction. The Foundation will provide a receipt to you for your gift that complies with the current IRS regulations. You should file a form 8283 with your tax return to claim your deduction, completing section A of that form. For gifts of publicly traded securities, the charity does not need to sign the form.

Re-registration of the Stock
While it is possible to do this, it is not an approach we recommend. Usually the donor will need to take the certificate to a banker or broker, who then sends the certificate to the transfer agent to have it re-registered in the name of the Madison Area Technical College Foundation. When the process is completed, the transfer agent then mails a new certificate to our Foundation.

The transfer agent will not provide us with the name of the donor; we simply receive a new certificate in the name of Madison Area Technical College Foundation. If you use this method, you must notify us of the name of the stock you are donating and the number of shares so that we can issue the appropriate acknowledgement for your tax records. The gift date will be somewhat uncertain using this method because the gift is will not be final until the re-registration process is complete and there is no way to tell in advance when the process will be complete. Therefore the gift value may be far different from what you had envisioned.

If the Stock is in a Brokerage Account
Request that the bank or broker holding the stock contact the Foundation for instructions. In most cases, a transfer can be easily arranged so that the gift will be made at the time of your choosing to maximize your tax benefits.


If you would like more information on appreciated gifts of securities, please contact:

Robert Dinndorf
Executive Director Philanthropy
608.246.6440
rdinndorf@madisoncollege.edu

David Koehler
Director of Development
608.246.6734
dkoehler1@madisoncollege.edu