Gifts of appreciated stock or mutual funds are popular because they generate a double tax benefit. In addition to receiving a charitable income tax deduction for the full fair-market value of the securities, you can reduce or avoid capital gain taxes. (Note: To qualify for this double tax benefit, the securities must have been held for more than one year.)

Example:

Mr. Johnson owns stock valued at $22,000, which he purchased three years ago for $2,000. Because he is in the 33% tax bracket, Mr. Johnson's gift of these securities to Carleton produces a $22,000 deduction that saves him $7,260 in income taxes (33% of $22,000). In addition, Mr. Johnson avoids capital gain tax on his $20,000 paper profit, which saves a further $3,000 ($20,000 gain x 15%). The net cost of his $22,000 gift is $11,740 ($22,000 less $7,260 less $3,000).

The full fair-market value of gifts of appreciated stock or mutual funds is deductible up to 30% of a donor's adjusted gross income (AGI). Any amount over the 30% ceiling can be carried forward up to five years.

Please note that a donor considering a gift of stock that has declined in value would be better off selling the stock to realize a deductible loss. The proceeds could then be used to make a gift to Carleton.

For more information

To learn more about using stock or mutual funds to make a gift to Carleton, please contact our Office of Major and Planned Giving.