Bill Snelling and Phyllis Momtazee-Snelling are Mustang fans
and longtime university supporters. They donated securities as part of a
charitable remainder trust to support athletics.
Contact Planned Giving to find out
how the gift also presented tax benefits for the couple.
As you consider tax-wise ways of giving to Cal Poly, you may want to analyze the benefits of giving appreciated securities. Long-term appreciated stock (those held longer than 12 months) are particularly beneficial to give because you receive a charitable deduction for the full fair market value of the gift and, in addition, you avoid paying capital gains tax on the appreciation. A charitable income tax deduction is allowed for up to 30 percent of your adjusted gross income in the year of the gift. Any unused portion can be carried forward for up to an additional five years. Scroll down for details about:
Here is how a gift of securities can work:
Mr. and Mrs. Mustang, who are in the 31 percent income tax bracket, would like to make a charitable gift to the
University. They are interested in giving some of their stock, which has appreciated greatly over the years. They select stocks with a current value of $2,500, purchased several years ago for $500. By contributing the securities to Cal Poly, they realize a $2,500 charitable deduction, which saves them $775 in income taxes (31 percent of $2,500). In addition, Mr. and Mrs. Mustang avoid the potential capital gains tax of $400 on the $2,000 appreciation (20 percent of $2,000).
Mr. and Mrs. Mustang's actual cost of the $2,500 gift of stock is only $1,325 (or $2,500 less $775 less $400). In other words, the cost of their gift is only 53 percent of the face value of the gift. In addition, their taxes may be further reduced because of state income tax deductions.
Easy Steps For Transferring Securities
The rules for transferring securities, while not complicated, are strict. You will want to exercise care to assure that your stock transaction is completed correctly. The same rules apply to giving shares of a mutual fund. If you have any questions about the following instructions please call Lisa Rockwell-Harpster, Trust Administrator for the Cal Poly Foundation, directly at (805) 756-5577.
Remember, the amount of your deduction depends on the value of the securities on the date the gift is completed. This date may be important for your tax planning, particularly at year-end. Read on for information about:
- When Securities are Held by a Bank, Broker or Mutual Fund Company
- When Securities are in Certificate Form in Your Possession
- Security Transfer Instructions
Establishing The Gift's Value
The gift value of the securities is the average of their high and low prices on the date of the gift. For mutual fund shares, the net asset value (NAV), at the close of business on the date of the gift, is used to establish the value of the gift.
A Final Note
Gifts of appreciated securities are an excellent way to provide for the University, its students and programs. Such gifts can also be used to create planned gifts, which provide you (and your spouse) with an income for life. Our Director of Planned Giving, Stacy Cannon, would be delighted to talk with you and your advisors about how such life income arrangements can be useful as part of your estate plan. She can be reached toll-free at (800) 549-2666, via fax at (805) 756-2711 or e-mail at email@example.com.
If you have any questions about the procedure for making a gift of securities to Cal Poly, please contact Lisa Rockwell-Harpster, Trust Administrator for the Cal Poly Foundation, at (805) 756-5577, via fax at (805) 756-0180 or e-mail at firstname.lastname@example.org.