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People who are holding securities that have grown considerably in value may be hesitant to sell them and incur a capital gains tax. Did you know that these appreciated securities can make excellent gifts to the Center — and provide you with a secure fixed income for life?
If you own a security that is paying minimal dividends, consider using it to establish a charitable gift annuity, which may increase the amount of income you receive and avoid capital gains tax otherwise due at the time the gift is made.
A charitable gift annuity is a contractual arrangement between you and the Center. You donate cash or marketable securities in exchange for a fixed annual payment for life. At your death (or the death of the second life in the case of a two-life agreement), the remaining value of the gift passes to the Center.
The frequency and amount of payments are based on your age at the time you fund the gift annuity. Payments will never change and are designed to continue regardless of how long you live or what happens to the economy. The minimum age for a charitable gift annuity with the Center is 60 and the minimum donation is $5,000, although deferred gift annuities can be established at age 55.
Choose the Securities You Donate Carefully
A security owned for one year (or less) is considered a short-term asset, and usually will not produce attractive tax benefits when donated to charity. In general, the income tax charitable deduction for a short-term asset is limited to your cost basis (the amount you paid for the stock).
If you own securities that have decreased in value, selling them and using the proceeds to make a cash gift to the Center is more beneficial. In that case, you can take a capital loss on your federal tax return and still enjoy a charitable deduction up to 50% of your adjusted gross income.
On the other hand, if you have owned a security for more than one year which has appreciated in value, but is paying you minimal dividends, consider the advantages of setting up a charitable gift annuity.
We would be very happy to talk to you about gift annuities. Contact the Center’s Planned Giving Department for a free, no-obligation Summary of Benefits personalized for you.
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