Gifts of appreciated securities are tax-deductible at full market value. They also relieve the donor from long-term capital gains tax on the appreciation. This double tax savings makes it possible for a significant gift to be made at a remarkably low after-tax cost. Appreciated securities often represent the most economical way to contribute during one’s lifetime.
For example: In 1980, you bought stock in company BUY at a cost of $2,500. Today, the stock is worth $10,000. You have a long-term capital gain of $7,500. Assuming a federal capital gains tax rate of 20%, you would owe a tax of $1,500 if you sold the stock. Instead of selling, you contribute the stock to CCBC. Your $10,000 gift saves $3,100 in income tax (31% x $10,000), plus $1,500 in capital gains taxes, for a total savings of $4,600. Your total gift of $10,000 was made at an after-tax cost of only $5,200.