Donating stock is a wonderful way to help TFPF fund programs to fix animal homelessness in Southern California and beyond. Whether your portfolio performance was above market averages or even if you had a decline in your portfolio value, donating stock to TFPF is a wise investment in helping cats and dogs in need.
Save Animals—and Taxes—With Appreciated Stock
If you have stock that you have owned for more than one year and it has appreciated since you purchased it, you can save on the capital gains tax you would owe if you sold it yourself by donating the stock to TFPF. And since TFPF is a 501(c)(3) charitable organization, you will be entitled to an income tax deduction for the full current market value of your gift, to the extent allowed by law.
Here is an example: Ms. B. Nice purchased 100 shares of ABC stock three years ago at $50 per share, or $5,000. This stock is now worth $100 per share, or $10,000. If Ms. Nice sells the stock, she will pay capital gains taxes on the $5,000 of appreciation. If Ms. Nice donates the stock to TFPF, she is entitled to a charitable deduction of $10,000 from her taxes and pays no capital gains tax.
You can also deduct stock donations equal to an amount of up to 30 percent of your adjusted gross income, and any excess deductible amount can be carried over for as long as five years to offset income or capital gains taxes.
How to Protect Animals—and Your Investment Portfolio
Another option for using your “long-term” appreciated stock to fight the exploitation of animals is to donate the stock to TFPF and either repurchase the shares on the market or diversify your assets by purchasing securities of an equal value in different sectors and industries. Not only will you be able to claim a charitable deduction for the fair market value of your gift, you will also minimize any capital gains tax when you eventually sell the replacement shares.
Here is an example: Ms. B. Nice purchased 1,000 shares of XYZ stock three years ago for $3,000. The stock has a current value of $44,000. She donates the 1,000 shares to TFPF and is thereby able to claim a charitable deduction for the fair market value of $44,000 while avoiding capital gains taxes on the profit of $41,000.
Ms. Nice then buys 1,000 shares of XYZ stock for $44,000. If, after holding the replacement shares for more than one year, Ms. Nice decides to sell out and the shares are then worth $50,000, she will pay capital gains taxes on only the $6,000 of profit garnered by the replacement shares, rather than the $47,000 of profit that she has made overall on the XYZ stock. The other $41,000 of profit is never taxed.
How to Turn a Stock Market Loss Into a Win
If you took a loss in the stock market, you can still help TFPF’s campaigns against cruelty! By selling stock at a loss and then making a donation to TFPF of the same amount of money that the stock was sold for, you can do the following:
- You can claim a charitable deduction for the gift.
- You can deduct the stock’s decrease in value from your other income, thereby reducing the taxes you pay.
- You can deduct up to $3,000 ($1,500 if you are married filing separately), but any amount of loss above that can be carried over to future years until completely deducted.
Here’s an example: Ms. B. Nice purchased 100 shares of XYZ stock three years ago at $50 per share or $5,000, but it’s now worth only $20 per share, or $2,000. Ms. Nice doesn’t expect the value of the stock to go up anytime soon. If Ms. Nice were to donate the depreciated stock to TFPF, she could claim a $2,000 deduction. But if Ms. Nice sells the stock and donates the $2,000 value to TFPF, she can also claim a $3,000 capital loss deduction ($30 loss per share times 100 shares). Assuming that she has no capital gains, she would be able to deduct the $3,000 from her income ($1,500 if she is married and filing separately, and carry over the remaining $1,500 capital loss to deduct from income or capital gains in future years).
For More Information
As always, we suggest that you consult with your independent financial, tax, or legal advisor for specific help with your particular situation, as the above is intended as an introductory outline only and TFPF does not provide financial, tax, or legal advice. But if you would like more information about the various ways in which your stock holdings can be used before year’s end to benefit animals—and yourself—please email us at donate@TFPF.org, or call us at 213-222-5566.