Gifts of Publicly Traded Securities Fact Sheet
Other than cash, securities (e.g. stock shares, mutual fund shares, bonds) are the most popular asset for funding charitable gifts to Cornell. Publicly traded securities are usually very marketable, have a clear value, and are easily transferred. Tax laws heavily favor gifts of assets that have increased in value; we have also outlined below some opportunities with securities that have not appreciated. Why should I consider a gift of securities? If your securities holdings have appreciated in value, you may have an opportunity to avoid capital gain tax that would be applied to the appreciation when the securities are sold. As with most charitable gifts, you may also earn an income tax charitable deduction for the full market value of the securities. With the tax savings, the “cost” of your gift to Cornell may be much less than the actual value of the gift made – and preferable to a gift of cash. In a sense, the IRS pays for a portion of your gift!
If you prefer to receive some of the proceeds from selling the securities, you may choose to sell some shares and give the remainder to Cornell. The income tax charitable deduction for the shares given to Cornell can partially or entirely offset the capital gain tax due on the shares you sell. What if I want to continue investing in the security? You may still benefit by making a gift of the security and then repurchasing additional shares with the cash you were contemplating giving to Cornell. You may avoid the capital gain tax on the charitable gift, yet continue to hold new shares that have a higher cost basis (purchase price). When you eventually sell the new shares, you’ll benefit from less taxable capital gain – or a greater tax deductible loss if the value decreases. What if my securities declined in value? One option is to sell the securities, enjoy a potential income tax deduction for the capital loss, and give the cash proceeds to Cornell. An income tax charitable deduction is available for the charitable gift. Can I also earn income payments from my gift? A variety of charitable life income arrangements with Cornell give you the opportunity to make a gift to Cornell while retaining a stream of income for yourself or someone else. By funding a life income arrangement with appreciated securities, you may benefit from avoiding or deferring the capital gain taxes that you would otherwise pay. Some alternatives allow you to “lock in” an income that is no longer dependent on fluctuations in the securities markets. Because some of the financial benefit is returned to you as income, the income tax charitable deduction will be less than for an outright gift of the securities to Cornell. How can I make a gift of securities to Cornell? If the securities are held in “street name” or electronically in your brokerage, bank, or other account, contact the Office of Trusts, Estates & Gift Planning for a securities transfer letter of instruction that can be presented to your account representative. The letter includes all the information needed to process the transfer. Make sure you notify the Office of Trusts, Estates & Gift Planning of the gift and intended designation for use of the gift; otherwise, we may not be able to identify the purpose or donor of the securities. Warning: If your account representative sells the securities before transferring them, you may end up paying capital gain tax that you expected to avoid. Give clear instructions to transfer, not sell, the securities. If you are holding the securities as certificates, contact the Office of Trusts, Estates & Gift Planning for a “stock power” form (your account representative may provide one). Sign the stock power but do not enter other information or dates; Cornell staff in the Office of Trusts, Estates & Gift Planning will enter that information based on the date we receive the documents. Then mail the certificates in separate envelopes to the Office of Trusts, Estates & Gift Planning What is the date and value of my gift? Gifts transferred electronically are complete on the date Cornell receives the transfer. Especially for year-end gifts or securities with fluctuating values, be sure to check with your account representative to determine how long the transfer will take. Some securities, such as mutual fund shares, can take a long time to transfer.Gifts transferred by mail are complete on the postmark date, if sent via the U.S. Postal Service. If a certificate and stock power are in separate envelopes, the later postmark applies. If you use a commercial courier, the applicable gift date does not occur until both the certificate and stock power arrive at Cornell.The recorded gift value of a publicly traded security is the average of the high and low market prices on the official gift date.How can Office of Trusts, Estates & Gift Planning be of assistance? We are charitable planning specialists and have resources available to fully support both your investigation and implementation of gift planning techniques. Our services are professional, confidential, collaborative and provided without cost or obligation. We encourage you to call on us to assist you, your family and advisors in exploring financial, estate and charitable planning. Printable version in PDF format |
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