Gifts of Appreciated Stock

Giving stocks and bonds to help Alley Cat Allies to fund programs can dramatically reduce your tax bill while helping us to help feral cats and kittens in trouble.

Whether your stock portfolio is performing well or is in decline, donating stocks or bonds is a wise investment in protecting the lives and well-being of feral cats.

Save Cats and Taxes with Appreciated Stock

If you donate stock that you have owned for more than one year and that has appreciated in value, you may qualify for a two-fold tax savings.

First, the amount of the income tax charitable deduction you receive is equal to the fair market value of the stock at the time of the gift.

Second, you save any capital gains taxes you may have owed on the difference between the stock’s cost basis (the stock’s purchase price) and the price at which the asset was sold on the open market.

Here’s an example:

Ms. Doe purchased 100 shares of stock three years ago at $50 per share, or $5,000. The stock is now worth $100 per share, or $10,000. If Ms. Doe sold the stock, she would pay capital gains taxes on the $5,000 of appreciation. If she donates the stock to Alley Cat Allies, she is entitled to a charitable deduction of $10,000 on her taxes and pays no capital gains tax.

You can also deduct stock donations equal to an amount of up to 30 percent of your adjusted gross income. Any excess deductible amount can be carried over for up to five years to offset income or capital gains taxes.

Tax Savings, Cash vs. Stock Gifts

How to Turn a Stock Market Loss into a Win (and help feral cats and kittens at the same time!)

If you took a loss in the stock market you can still help Alley Cat Allies’ programs and campaigns. By selling stock at a loss and then donating that money to Alley Cat Allies you can accomplish the following:

• Claim a charitable deduction for the gift.
• Deduct the stock’s decrease in value from your other income,* thereby reducing the taxes you pay for the year in which the gift was made.
  
  *= You can deduct up to $1,500 if you are single and $3,000 if you are married, but any amount of loss above that can be carried over to
  future years until completely deducted.

Here’s an example:

Ms. Doe purchased 100 shares of stock three years ago at $50 per share (or $5,000) but it’s now worth only $20 per share (or $2,000). Ms. Doe doesn’t expect the value of the stock to go up anytime soon.

If Ms. Doe were to donate the depreciated stock to Alley Cat Allies she can also claim a $3,000 capital loss deduction ($30 loss per share x 100 shares). Assuming that she has no capital gains, she would be able to deduct $1,500 from her current income. (If she is married and filing jointly she could deduct the complete $3,000). She can carry over the remaining $1,500 capital loss to deduct from income or capital gains in the next or future years.

To learn more about making stock donations, please contact: Elise Ravenscroft, Development Director, at 240-482-1983, or eravenscroft@alleycat.org.