Closely Held Stock
Benefits:
Income tax deduction for the charitable contribution
No capital gains tax on the appreciation in value
No second tax on accumulated earnings by averting a dividend distribution
You main control of the corporation |
If you own a sizable block of stock in a closely held corporation, you may have a gift option that makes everyone happy.
Suppose you decide to donate dome shares (few enough that you retain 50% ownership) to Mercer University. And then Mercer presents the stock to your corporation for redemption. Your corporation uses retained earnings for the purchase.
Mercer wins because we receive much-needed funds. But you and your corporation also win.
There's one caveat: the IRS has ruled that you cannot legally bind a charitable organization to go through with the redemption at the time it receives the shares.
But a charitable organization may independently offer the donated stock for redemption, and there's little likelihood that we would fail to do this. It's a favorable option that benefits you and us.
Charitable Estate Planning Home | Next Page: Charitable Remainder Trusts