Creative Giving Ideas- Week 3
The churches, associations,
institutions and agencies of the Kentucky Baptist Convention and Southern
Baptist Convention are making a difference for the Kingdom of God in our state,
nation and around the world. They are
worthy of significant and sacrificial support that will enhance and undergird
their missions and ministries.
Perhaps you would like to make
gifts above what you give out of income as tithes and offerings to provide
on-going support to one or more of these causes, but you may be concerned that
such gifts could affect your financial security and that of your family. This lesson focuses on using assets that have
appreciated in value for making “above and beyond” gifts to support the
ministries that are important to you.
Scripture References: Luke 16:10-12; 1 Timothy 6:9.
Please read these passages in
your Bible now.
What are the Benefits of Using
Appreciated Assets to Make Charitable Gifts?
Using appreciated assets such as
stocks, bonds, mutual fund shares, or real estate to make gifts to charity
during your lifetime provides multiple advantages---a charitable income tax
deduction based on the current market value of the asset (assuming you have
owned it for at least a year) and avoidance of all or a portion of the capital
gains tax that would be incurred if you sold the asset.
How Does Giving An Appreciated
Asset Compare to Using Cash for My Gift?
Using an appreciated asset to
make your gift to charity can result in a lower after-tax cost to make your
gift than if you use the same amount of cash to make your gift. In essence, the amount coming out of your
pocket may be less if you use an appreciated asset.
Example: Martha wants to make a gift of $10,000 to her
church’s building program. She is trying
to decide if she should use some stock that she purchased several years ago for
$5,000, which has a current market value of $10,000 or her $10,000 certificate
of deposit, which matures soon. The
value of her charitable gift, whether she uses the stock or the cash, is
$10,000 that will save $1,500 in income taxes (IF she is in the 15% income tax
bracket). If Martha uses the stock to
make her gift, she also saves $750 in capital gains taxes that she would incur
if she sells the stock (15% of the $5,000 of capital gains that would be
incurred if she sold the sold).
Therefore, the after-tax (out of pocket) cost of making the stock gift
is only $7,750 vs. $8,500 if she uses the cash.
See the example below.
Gift
of Stock vs. Gift of Cash
Value of Gift $10,000 $10,000
Income Tax Savings ($1,500)
($1,500)
Capital Gains Savings ($ 750) ---
After-Tax Cost $
7,750 $ 8,500
Prayer Focus: Take time
now to ask God if you should consider making an appreciated asset gift to your
church or other Baptist cause.
Next Week: Life Income Gifts
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.
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