Appreciated securities

Appreciated securities

A gift with twice the tax benefits

Are you looking for a way to support IU and maximize your tax benefits? Are you planning to sell appreciated stock (held for more than one year) or rebalance your portfolio while avoiding the capital gains tax?

A gift of appreciated stock supports IU, qualifies for a deduction for the full value of the stock, and bypasses any capital gains tax on the appreciation.

Publicly traded stocks are the most commonly donated appreciated securities, but you can also give bonds, mutual fund shares, or closely held stock. You can also choose to make an outright gift or use appreciated stock to fund a gift that provides you with an income stream. Learn more about charitable gift annuities or charitable remainder trusts.

See it in action

As Darla enters retirement, she has an investment objective that calls for 30% equities and 70% low-risk, low-return investments. When the markets rise, her investment gains push her equity holdings to 45% of her portfolio. She wants to sell some stock to restore her intended portfolio balance but doesn’t want to pay the significant capital gains tax that a sale would trigger.

Instead, Darla decides to use some of her stock to fulfill her charitable goals. She donates the stock directly to the IU Foundation, designating her gift to a meaningful scholarship fund. By doing this, she owes no capital gains tax, rebalances her portfolio, and gains a helpful tax deduction.

The “best” stock to donate? It depends

While you’ll want to consider your overall portfolio, investment goals, and tax situation, the “best” stock to donate may be one:

  • You’ve held for more than one year, which will allow you to deduct the full fair market value
  • With significant appreciation, which will provide the strongest tax benefits
  • That will help you reposition your investments and rebalance your portfolio
  • That lowered or cut its dividend