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Tax Benefits of Donating Stock

by Mike Davis, Stewardship Committee
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“Remember this – you can’t serve God and Money, but you can serve God with money.” – Selwyn Hughes

Stock donations have tremendous value for Zion.  In fact, it is almost always better to donate appreciated stock, electronic fund transfers (EFTs), or mutual funds than it is to donate cash.

Why?  One simple reason: donating stock to Zion allows you to avoid capital gains tax.  This means church gets the full value of your stock, potentially increasing what otherwise could be a cash donation by 37%.

For example, an appreciated stock worth $10,000, if sold, may result in $2,000 of capital gains tax – leaving you $8,000 to use or donate.  Instead, you can donate the stock or mutual fund directly to Zion.  Zion then receives the full $10,000 value, and you write the full $10,000 value off your taxes too!**

Another benefit of considering donating stock is a great opportunity to reevaluate your investment portfolio and make sure you have a healthy portfolio diversification.

In order to receive the best tax deduction, you should donate appreciated stock that you have held for more than one year.  You will get the tax deduction equal to the current fair market value – not what you originally paid for the stock.  So, you’ve increased your deduction, just by owning the stock.

However, an underwater stock or fund is not a good candidate for donating. In this case, it is better to sell the stock and donate the funds as cash.  Zion receives the same amount either way, but if you sell the stock you can take the full capital gains loss and still deduct the donated cash amount from your taxes.

For instructions on how to transfer stocks, EFTs, or mutual funds to Zion, please contact Steve Peterson in the Zion office.

**As with all financial and tax implications, please consult with tax and/or financial professionals to ensure all current laws are taken into consideration.

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