Income and capital gain tax savings generated by a gift of stock
of mutual fund shares can dramatically reduce your after-tax cost of giving.
When you sell appreciated assets, you will be taxed on the gain in value. When
the Unitarian Universalist Association (UUA) sells them, there is no tax on the transaction because the UUA is tax
An example, Jeannie Mae Eliot has 50 shares of Quikfix, Inc.
stock which she bought ten years ago at $10/share. Today, those 50 shares are
If Jeannie Mae Eliot sells the stock herself, she must pay capital
gains taxes on the $19,500 increase in the stock’s value since she purchased it.
She is in the 36% tax bracket, and the capital gain tax rate on this asset would
be 20%. After she pays tax on the gain, she will have $16,100 of the original
$20,000 remaining to give away or reinvest.
After-Tax Cost of Stock Gift
If Jeannie Mae Eliot gives the stock to the UUA and the UUA sells it, then
she saves both income taxes and capital gain taxes, as follows:
What are the new tax rates on capital gains?
Here’s a chart of the capital gain tax rates you are expected to pay, based
upon how long you have owned or held the securities and your ordinary income tax
The Holding PeriodIf you owned the security for 12 months or less (short-term appreciated property), your deduction will be limited to cost, or the purchase price you paid for the stock.
If you owned the security for more than 12 months (long-term appreciated property), your deduction will be for the full fair market value, calculated as a mean of the low and high market values of the stock on the day that it is transferred to the UUA. Deduction Limits and Carry-Over Period
Gifts of cash and short-term appreciated property (see box above)
are deductible up to 50% of your adjusted gross income (AGI) in one tax year.
Gifts of long-term appreciated property are limited to 30% of AGI.
Unused excess deductions may be carried forward to the next tax
year, for up to five years beyond the year of the gift.
Can I make a gift and receive regular payments for the rest of my
Yes. The UUA operates both a Pooled Income Fund and Charitable Gift Annuity Program. These IRS-approved gift arrangements pay fixed or
variable amounts to one or two individuals for the rest of their lives. After
the death of all income recipients, the charitable gift is released to the UU
group named by the donor. These gifts may be used to support the UUA
directly, and/or any UU-affiliated organization, including your local
For more information contact web @ uua.org.
This work is made possible by the generosity of individual donors and congregations.
Please consider making a donation today.
Last updated on Thursday, September 8, 2011.
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