Transform Lives For Eternity

Did you know that you can transform lives for eternity and gain significant tax and investment planning advantages at the same time? Although the stock market has moved mostly sideways in 2015, many investors hold assets with substantial gains earned during the bull market of the past six years.

The tax code provides powerful incentives for transferring appreciated assets, such as stocks, bonds, mutual funds and other investments, to charity. When appreciated assets are sold, the ensuing capital gains are taxed at combined federal and state rates as high as 30%. By instead contributing such assets to an organization like Covenant Harbor, you avoid capital gains tax and obtain a charitable deduction for their full market value.

Illustration: Mr. and Mrs. Johnson would like to make a significant gift to Covenant Harbor. They plan to fund the gift with stock worth $20,000 that they purchased several years ago for $10,000. If they sell the stock, the resulting capital gain would trigger up to $3,000 in taxes, leaving only $17,000 in cash to make their gift. By contributing the stock directly to camp, the Johnson’s get a larger tax deduction, avoid the capital gains tax altogether and, provide the ministry with a larger gift.

This technique also serves a valuable investment planning tool as investors with appreciated assets re-balance their portfolios. To continue the example above, the Johnson’s stock may reflect a company, industry or asset class that is overweight within their portfolio. Contributing the stock rather than selling it provides a tax-advantaged method of managing their investments.

“As we wrap up the tax filing season, it’s an ideal time to incorporate appreciated assets in giving plans for this year,” according to Jon Lokhorst, Development Director at Covenant Harbor. “People often revisit their charitable planning as they get their taxes done.”

Making a gift of publicly traded securities is as simple as providing instructions and account information to your investment adviser. Gifts of other appreciated property may require professional counsel. Please contact Jon Lokhorst at 262-248-3600 to discuss strategies appropriate for your situation.