Stock Donations as Legacy Gifts

Donating Closely-Held Stock

If you hold stock in a closely-held business, you may be able to use those shares to make a meaningful and significant gift to Gwynedd Mercy Academy High School.

This charitable giving option may be right for you if:

• You are a majority shareholder in a closely held corporation.
• You'd like to remove retained earnings from the corporation, without having them taxed again.
• You'd like to maintain a controlling position in the corporation's outstanding stock.
• You want to avoid capital gains taxes on the shares you donate to Gwynedd Mercy.
• You'd like to receive a federal income tax deduction for the full appraised value of the shares.

What are the benefits?

• You'll eliminate capital gains tax liability on the sale of the assets.
• If you itemize, you'll enjoy a current year tax deduction.
• Your company may also benefit from your gift. Since there is often no resale market for these shares, Gwynedd Mercy may be willing to sell the shares back to your company. If your company uses either retained earnings or an employee stock option plan to redeem the shares, it may be able to reduce or avoid taxes.

What are the gift options?

• An outright gift that gives you a charitable deduction for the fair market value of the property while potentially avoiding capital gains taxes.
• A gift that pays you income for life, gives you an immediate tax deduction and leaves any remaining assets to Gwynedd Mercy after your death.
• A gift that pays income to Gwynedd Mercy for a set period of years, then is passed on to your heirs with considerable estate and gift tax savings.

Planning Tips:

• If your wealth is concentrated in the stock of one company, donating some of that stock to Gwynedd Mercy to create a life income gift (such as a charitable gift annuity or charitable remainder trust) can help you reduce market risk and diversify your income sources.
• Although incentive stock options cannot be donated while you are alive, consider giving them to Gwynedd Mercy as part of a bequest (if your plan allows it). You'll be able to create a personal legacy at Gwynedd Mercy and potentially save on estate taxes.
• Keep in mind: gifts of closely held stock may require a qualified appraisal, which can take some time to complete-contact Gwynedd Mercy early in your decision-making process.