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gifts of appreciated stock - Iowa Automobile Dealers Association


									                                                Sooner or later, you’ll be tempted to cash in part or all of your stock holdings. Under current
                                                law, you would lose about 29% of your cash proceeds after you pay federal and state capital
It sounds too good to be true . . .             gains taxes.
                                                On the other hand, if you donated your appreciated stock to the IAD Foundation, you get a
                                                “double tax break”—you take advantage of the charitable deduction plus you avoid the
Gifts of Appreciated Stock                      capital gains tax you would’ve paid had you cashed in the stock. Added together, the double
                                                tax break gives you net after-tax cost of only about 31% of the amount you donate.
Receive a Double Tax Break
                                                                                                 If Dealer Donates Stock Worth $10,000
                                                                                                 to IAD Foundation, Dealer Gets Double
The Tax Code seems to always work                                                                Tax Break:
against our best interests.                      If Dealer Cashes in or Redeems
                                                 Stock Worth $10,000, Dealer Pays                Tax Break #1: Charitable Deduction
                                                 Capital Gains Tax:                              Federal Tax Deduction (39.6%) $3,960
Not this time!
                                                 Sale Price                       $10,000        Iowa Tax Deduction (8.98%)     $ 898
                                                 Less Fed. Cap. Gains Tax Paid                   Total Savings from
We’ve discovered that the Tax Code provides
                                                          (20%)                   ($2,000)       Charitable Deduction          $4,858
tremendous tax advantages to donors who give     Less Iowa Cap. Gains Tax Paid
appreciated stock to qualified 501(c)(3) tax-             (8.98%)                  ($ 898)
exempt charitable organizations including the    Total Capital Gains Tax Paid      (2,898)       Tax Break #2:
IAD Foundation.                                  Net After-Tax Proceeds when redeeming           Capital Gains Avoided              $2,898
                                                 $10,000 worth of stock:          $7,102         Less: Adjustment to account for
                                                **These examples make the following
                                                                                                 the overstated cross-deduction of
                                                assumptions: the stock’s tax basis for           federal taxes on the Iowa return and
The bottom line is this: anybody who gives      federal income tax purposes is zero, the         Iowa taxes on the federal return ($900)
stock to the IAD Foundation enjoys a            stock has been held more than one year,          Net Capital Gains Impact          $ 1,998
double-dipping tax advantage. Apply the         the dealer is in the top federal and state
full appreciated value of the stock as a        income tax brackets, the dealer itemizes        Summation of Tax Breaks
                                                deductions, and deducts federal taxes on         Tax Break #1                     $4,858
charitable deduction on your federal and        the Iowa return and deducts Iowa taxes on       + Tax Break #2                    $1,998
state tax returns AND ALSO avoid the            the federal return. Please consult your                                         = $6,856
capital gains tax that would have been          professional advisor for details on how a
levied on the appreciated value when you        donation affects your personal financial
                                                                                                Net After-Tax Cost of Donating $10,000
would have ultimately cashed in or              situation.
                                                                                                worth of Stock($10,000 - $6,856) = $3,144
redeemed the stock.
                                                To calculate the net cost of making larger donations, simply multiply the amount donated
That’s right. A Double Tax Break.               times 0.3144 (or $3,144 per $10,000) — for example, the after-tax cost of a $50,000
                                                donation is only $15,720.
                                                With these tax considerations, it is much easier to make a substantial contribution to the
                                                IAD Foundation. An investment for today and the future.
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 Here are some options                                                                     Tax
 to consider:
n Sponsor an Endowed Scholarship.
  Donors who invest $25,000 or more
  can create an endowed scholarship in
  their name, or in the name of a loved
                                             Whichever option you choose,
                                                remember that gifts of                   From
                                              appreciated stock can give
  one. Creators of endowed
  scholarships also have the option of
  setting reasonable guidelines to direct
                                             your favorite charity more and
                                                     cost you less.
  who receives that endowed scholarship
  (for example, a creator could stipulate                                                    Of
  that each winner must live in the county
  of the creator’s dealership).
n Join the “Legacy Gold” Club.
  A $10,000 pledge over 5 years is all it
n Estate Plans. Mention the IAD
  Foundation in your estate plans.
  Consider a gift of cash or appreciated         To learn more about gifts to the
  stock. We have prepared some
  guidance for you to give to your estate
                                                        IAD Foundation,
                                                 please contact Dave Duncan at
                                                       IADA Headquarters
  planner in a booklet called “Planned
  Giving: Wills, Bequests and other ways
  to make a gift that keeps on giving.”
                                                     1111 Office Park Road
                                                  West Des Moines, IA 50265
                                                         (515) 226-1900
                                                      Fax: (515) 226-1988

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