Taxpayers have long enjoyed the opportunity to make charitable gifts of stocks, bonds, mutual funds, and other securities that have increased in value while bypassing capital gains tax that would be due on a sale. You are, in effect, allowed to use "paper profits" to help reduce federal, and perhaps, state income taxes. This is possible because our nation's tax laws provide that one can give appreciated assets and take an income tax deduction for the year of the gift based on the current fair market value of the donated property, no matter how much was originally paid for it.
To take the deduction for gifts of securities and other assets at their current value, you must have owned them for more than one year. Such gifts are deductible up to 30% of adjusted gross income (AGI) in the year of the gift. Any unused deduction amounts may be used to help reduce taxes in up to five future tax years.
When giving securities, including mutual funds, bonds, notes, or mortgages, specific advice should be obtained from your financial advisers. Additional time should be allowed for completion of such gift transactions. The value of a gift of publicly traded securities will be the average of the high and low prices on the date the gift is completed.
For more information, call (717) 242-7365.