Closely Held Securities
Income Tax Deduction
A donor may deduct the current value of appreciated closely held securities held long-term, if transferred to a 50% charity, up to 30% of AGI with five-year carryover for excess deductions. Transfers to 30% charities are deductible at cost basis only, up to 20% of AGI, with a five-year carryover. Securities with short-term gain are deductible at cost basis.
Capital Gains Considerations
No gain is reportable when donors give closely held securities, which is advantageous even for taxpayers who are unable to "itemize" deductions.
Date Gift Is Effective
The date of the gift is the date of delivery of securities in negotiable form to a charity or its agent. If certificates are transferred into a charity's name, the gift is made on the date the securities are transferred on the books of the transfer agent; normally it is the date of the certificate.
Method of Transfer
Delivery of securities must be made in negotiable form to a charity or its agent, or by transfer of certificates into the charity's name.
Valuation of Gift Assets
The value is established by an independent appraisal, applying IRS rules. Factors considered in valuing closely held stock include corporate assets, earnings and future earning power, dividend policy, prospects of the company, and sales of stock near the contribution date.
Substantiation Requirements
For deductions of $5,000 or less, a receipt from the charity and Section A of Form 8283 are required. From $5,001 to $10,000 of deduction, Section A and Parts I and II of Section B of Form 8283 are also required. Above $10,000, receipts, qualified appraisals, and completed Sections A and B of Form 8283 are needed.
Special Considerations
Gifts of closely held securities are often negotiated with anticipation of corporate redemption of charity's stock. A new certificate of stock should be obtained. Gifts may also be attractive where the sale of a corporation is anticipated.
A donor may deduct the current value of appreciated closely held securities held long-term, if transferred to a 50% charity, up to 30% of AGI with five-year carryover for excess deductions. Transfers to 30% charities are deductible at cost basis only, up to 20% of AGI, with a five-year carryover. Securities with short-term gain are deductible at cost basis.
Capital Gains Considerations
No gain is reportable when donors give closely held securities, which is advantageous even for taxpayers who are unable to "itemize" deductions.
Date Gift Is Effective
The date of the gift is the date of delivery of securities in negotiable form to a charity or its agent. If certificates are transferred into a charity's name, the gift is made on the date the securities are transferred on the books of the transfer agent; normally it is the date of the certificate.
Method of Transfer
Delivery of securities must be made in negotiable form to a charity or its agent, or by transfer of certificates into the charity's name.
Valuation of Gift Assets
The value is established by an independent appraisal, applying IRS rules. Factors considered in valuing closely held stock include corporate assets, earnings and future earning power, dividend policy, prospects of the company, and sales of stock near the contribution date.
Substantiation Requirements
For deductions of $5,000 or less, a receipt from the charity and Section A of Form 8283 are required. From $5,001 to $10,000 of deduction, Section A and Parts I and II of Section B of Form 8283 are also required. Above $10,000, receipts, qualified appraisals, and completed Sections A and B of Form 8283 are needed.
Special Considerations
Gifts of closely held securities are often negotiated with anticipation of corporate redemption of charity's stock. A new certificate of stock should be obtained. Gifts may also be attractive where the sale of a corporation is anticipated.
