Many people find that the best way to make charitable gifts is in the form of marketable securities that have increased in value. It may be possible to make your usual gift at lower cost or even make a larger gift at no increased after-tax cost.

Double Tax Benefits

One reason why it can be economical to make a gift of securities stems from what might be considered a "double tax benefit."

When you give securities (stocks, bonds, or shares in a mutual fund) that have increased in value and been owned long enough to qualify as long-term property, you are entitled to a federal income tax deduction based on the current fair market value of the security, regardless of what it originally cost. For a gift of $1,000 in securities, this savings alone could amount to as much as $396 or more, depending on your income tax rate, income, and number of personal exemptions.

The second benefit comes from the fact that a gift is not a sale. As a result, you do not have to pay capital gains tax on any increase in value in the securities given. The tax would be due if you sold them. Bypassing the tax altogether can be a major benefit. For example, if the securities mentioned above were purchased for $300, tax on the $700 increase in value could be bypassed.

Give More at the Same Cost

To arrive at the total tax savings for a gift of appreciated securities, count both the charitable deduction and the capital gains tax bypassed. Thus the net cost of giving can be significantly lower when the gift is made in the form of appreciated property rather than cash. The exact savings depends on how much the asset has increased in value, your tax rate and level of income, and other factors. Keep in mind that the net cost of giving $1,000 cash for a person in the 39.6% marginal income tax bracket is $604 ($1,000 - $396 savings). If that person has $1,500 of securities (which cost, say, $350), he or she can give them at a net cost of $676, very close to the cost of a gift of just $1,000 in cash.

To take a deduction for gifts of securities or other assets at their current value, you must have owned them for at least one year and a day. Such gifts are deductible up to 30% of adjusted gross income (AGI) in the year of the gift. Any unused deduction amounts may be used to help reduce taxes in up to five future tax years.

Example:

John and Sarah Fox purchased 50 shares in XYZ Corporation in 1982 at a cost of $2,000. Today the shares are worth 10,000 and pay less than 2°/o in annual dividends. If the Foxes sold the stock, they would realize an $8,000 capital gain. Because they ,have held the securities long-term (for more than one year), they would owe as much as $1,600 in federal capital gains tax on a sale. More could be due in state taxes as well, depending on where they live. The Foxes, who have committed to make charitable gifts totaling $10,000 this year, normally make their gifts in the form of cash.

Let's look at that option and two alternatives.

Note that in their tax bracket, the Foxes would realize tax savings of $3,960 by making gifts of cash. The least desirable alternative would be to sell the stock and give the proceeds, as the payment of the capital gains tax would reduce their net tax savings to just $2,360. If they instead made their gifts in the form of the XYZ stock with a cost basis of $2,000, they would completely avoid capital gains tax and their combined tax savings would increase to $5,560, some 40% greater savings than if they made their gifts in the form of cash.

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The Diocese of Charlotte maintains a brokerage account with Wachovia Investments, Inc. for the purpose of processing stock (and certain mutual fund) contributions to the Diocese for the benefit of the Diocese of Charlotte or any of its parishes, schools or agencies.

Step I: Transfer stock:

Electronically:

Publicly traded stock: Provide your broker with the information shown in Attachment I on the top portion of the page. Your broker will inform you if additional information is required.

Mutual Funds: Contact the Wachovia Investments Charitable Funds Coordinator at 1-800-922-9008 (option 2). You will need to identify the specific mutual fund you wish to donate. Wachovia Investments will forward to you an ACAT Account Transfer Form. Please complete the form fully and attach a copy of your most recent mutual fund statement. Once this has been completed,. have your signature Medallion guaranteed at the financial institution of your choice. Mail the completed packet to:

Wachovia Investments 
101 Greystone Blvd.
Columbia, SC 29226

Attn:  Jim Adams, Charitable Funds Coordinator

Donations of physical securities:

Physical stock certificates should be delivered to a branch office of Wachovia Bank. (Please do not deliver stock certificates to your parish or to the Pastoral Center.) Inform the bank representative that you wish to make a gift to the Catholic Diocese of Charlotte through the Diocese's brokerage account with Wachovia Investments, Inc. (#300 4848 218). While there, the owner(s) of the shares (as shown on the face of the certificate) must sign a stock/bond power and have the signature(s) Medallion guaranteed by the bank representative. Please also complete the bottom portion of Attachment I and deliver it to Wachovia Bank with the stock certificate(s).

Step 2:  The donor is to complete Attachment II and mail or fax it to: 

Catholic Diocese of Charlotte
Attn:  Finance Office-Stock Processing
1123 South Church Street
Charlotte, NC 28203

Fax: (704) 370-3378

Within 30 days of receipt of the stock/mutual fund into our account (or receipt of Attachment 11 by the Finance Office, if later), we will sell the stock and mail a check to the diocesan entity you identify in Attachment II. At that time, we will also send you an acknowledgment which complies with IRS regulations.

My Dear Brothers and Sisters,

I would like to share some thoughts with you about our new campaign for growth and the further building of the Kingdom, which God has shared with us and is Given By Grace. Our faith is given by grace. Our love is given by grace. Our life is given by grace. Actually everything we have and are is given by grace.

I came to this parish during the first week of July with a heart full of joy at being the pastor of this great parish. During my time here, that joy has not diminished, because I've been able to recognize the grace given and shared by you, my brothers and sisters in Christ. This grace is a gift from God. You may have even heard me say that I wonder if this parish is Saint Leo the Great Catholic Church or is it Saint Leo, the great Catholic Church. I see it rapidly becoming the latter.

Our earlier family formed this parish in 1888, knowing that God was giving His Grace to it. Over the years it has grown and has shown continuing evidence of grace. They built the beautiful church in which we worship, and later the school which has educated so many in our faith. As our family grew we made further additions. Now, it is time to recognize our needs today and help each other reach a new level, again, Given by Grace.

This gift of grace was, and is still being given as a gift. One that keeps on giving, but we must do our part to exercise this great gift to keep it growing. We have a wonderful opportunity to do just that in our capital campaign, entitled "Given-by Grace:"

In the very near future, someone will be calling on you to share the vision and ask your support of this venture in faith. I ask you to open your mind and heart to receive what they have to say. I also ask you to open your doors to them and your faith in God to share your generosity so we can continue to grow further and fuller in our life together, Given by Grace.

Sincerely,

Reverend Cecil W. Tice,  Pastor