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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. ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ Here are some options Tax to consider: n Sponsor an Endowed Scholarship. Breaks 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. Gifts 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). Appreciated n Join the “Legacy Gold” Club. A $10,000 pledge over 5 years is all it takes. Stock n Estate Plans. Mention the IAD Foundation in your estate plans. The 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 Iowa 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 Automobile 1-800-869-1900 (515) 226-1900 Fax: (515) 226-1988 Dealers e-mail: email@example.com Foundation
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