Stocks and Bonds


Donating appreciated securities is an easy way to provide immediate support to MLR’s work, while maximizing your tax benefit.  You can avoid capital gains tax on the sale of appreciated stock, and take an income tax deduction for its full market value.


For example, let’s say you bought $2,000 worth of publicly-traded stock in 2009.  The stock is now worth $10,000.  If you were to sell the stock, you would incur capital gains taxes on the $8,000 worth of appreciation, which could range from $1,200-$2,000 or more, depending on your  tax bracket and state of residence.  At the top rate of 23.8%, you will owe roughly $1,900–before any further state taxes are assessed.  The stock may have a value of $10,000, but to you, it’s only worth $8,100.


To a tax-exempt charity like MLR, however, the full $10,000 can be put to work, because MLR can liquidate the stock without having to pay capital gain taxes.  Furthermore, you receive an income tax deduction for the full $10,000 gift, even though it was only worth $8,100 to you–which at the top rate would save up to $3,960 (before any state tax savings are considered).  Both you and MLR get the best of all worlds: you avoid $1,900 or more in capital gain taxes, while still benefiting from the full $3,960 income tax deduction –resulting in an “after-tax” cost to you of barely more than $4,000 for a $10,000 gift to MLR!


To take advantage of this “double” tax benefit, it’s important to make sure you transfer stock directly to MLR so that MLR can sell it tax-free.  If you were to sell the stock yourself and then transfer the sale proceeds, you’ll miss out on the capital gain tax benefit.  Contact us to ensure the process goes smoothly!


Q: But I love my ExxonFacebook Corp. stock—I don’t want to get rid of it.  Shouldn’t I just give cash instead?

A: There’s nothing wrong with donating cash if you prefer, but thy wouldn’t you want to get rid of all that lurking capital gain forever?  Have it both ways: give MLR the low-basis stock, and use the cash you would’ve donated to re-purchase that stock–now with a new, higher basis that permanently eliminates all that unrealized capital gain.  You’ll still own the stock you like, you’ll still receive the same income tax deduction, and you’ll have eliminated all unrealized capital gain.


Q: I’m a Montana resident–can I use stock to fund a planned gift that will allow me to take advantage of the incredibly generous Montana Endowment Tax Credit?

A:  Yes!  Stock can be used to fund many of the types of planned gifts that qualify for this amazing credit, which expires in 2019.  Take the example above–by using the stock to fund a deferred charitable gift annuity structured to take maximum advantage of the tax credit, the “after-tax” cost of a gift worth nearly $10,000 to MLR could be $2,000 or less!  Contact us to learn more.