Using securities to make a gift provides flexibility that may make giving easier and more to your advantage.
-A gift of marketable low-yield securities has little or no impact on your current income.
-Financial securities can be used to fund both outright and deferred gifts.
-BPPA gives your gift credit for the full current value of the gift.
When you make a gift of long-term appreciated securities, you maximize the gift to the Brooklyn Prep Alumni Association and enhance your tax advantages at the same time. When making a gift of long-term appreciated securities, be sure to transfer ownership of the securities to BPAA and not sell the securities on your own. This protects you from the capital gains tax on any appreciation.
For example, if you were to sell long-term appreciated securities, you would be liable for the federal capital gains tax, currently as much as 15% of the difference between the current value of the security and your cost (and possibly state capital gains tax as well). However, by transferring ownership of long-term appreciated securities to BPAA, you avoid capital gains tax on the appreciation. On outright gifts of securities, you will owe no capital gains tax.
When you transfer long-term appreciated securities to BPAA, you receive credit for the full current value of the gift.
For outright gifts, you receive a current income tax charitable deduction of 100% of the current value of the gift, subject to certain limitations, assuming you have held the securities for at least one year and a day. For deferred gifts, the deduction is the present value of the future gift, calculated according to IRS formulas.
Securities can be transferred to BPAA three ways: electronically, by mail, and by re-registration in BPAA's name. Your date of gift is the date of transfer: the date your broker transfers shares, the date you mail certificates, or the date re-registration is complete on the corporation's books.
If you have any questions regarding the gifting of securities please contact BPAA Board member Michael Comerford for assistance in any of these matters at:
Comerford & Dougherty, LLP
Reminder to donors: the IRS may require you to complete form 8283A for a gift of securities. Please consult your tax advisor regarding your personal situation.
Whenever making important decisions regarding charitable giving or estate planning it is always best to consult your attorney and tax consultant.