MISSION MATTERS
FEBRUARY 2024
Masonic Charities Update
Tax-Smart Giving
Here’s a more detailed description of how Peter and Masonic Charities benefited from this concept:
Using Appreciated Securities A couple months ago, I was discussing gift planning options with Peter, one of our Masonic Charities donors. While contemplating a $25,000 cash gift, Peter mentioned owning some appreciated stock.
“It would be hard to part ways with stock,” Peter said. “What makes you so attached to your stock investment?” I asked. “Well, it’s performed well for the 20+ years I’ve held it,” Peter responded. I could understand his emotional attachment to something that had served him well, but considering Peter’s charitable intent, I proposed the following:
”What if there’s a potential opportunity to meet all your objectives and achieve a win-win-win situation?” Intrigued, Peter asked me to explain. We discussed the following concept:
1. Transfer $25,000 of appreciated stock to Masonic
Charities, avoid capital gains taxes, and if the holding is over one year, deduct the full market value – WIN #1
2. Maximize the total amount going to the charity,
since those taxes won’t reduce the gift – WIN #2
3. Use $25,000 in cash to buy the very same stock
back and maintain your portfolio value – WIN #3
In this scenario, the donor regains his stock and benefits from avoiding taxes, receiving deductions and maintaining his portfolio goals. Peter was excited about this solution and discussed the plan with his advisor.
Nicholas Mahler, Vice President, Office of Mission Advancement and Development
Peter owns 500 shares of an appreciated stock that is currently trading at $50 per share, which he purchased for $10 per share nearly 20 years ago.
If Peter were to sell this stock and give the proceeds to charity, at his current tax rate, he would pay $3,000 in capital gains taxes on his $20,000 profit and would be able to make an income tax deductible gift of $22,000. But, since Peter decided to transfer the 500 shares directly to the Masonic Charities, a tax-exempt organization, he will pay no capital gains tax and can deduct the full $25,000 value of the gift. Moreover, the program that Peter supports will receive the full $25,000 value of the gift, rather than $22,000. Appreciated securities are also a smart way to fund a gift plan, such as a charitable gift annuity or a charitable remainder unitrust, that will support your favorite charity. The tax deduction for these gifts is limited to 30% of your adjusted gross income (AGI); however, if you can’t use the entire deduction in year one, you can carry over the unused portion for five years. Whether funding a life income gift or an outright gift, consult with your tax advisor regarding the availability of a charitable income tax deduction. The Masonic Charities can also assist donors with the transfer and liquidation process of appreciated stocks through its resources and professional partnership network.