Benefits Of Stock Gifts
The gift of stock in a company can be a double benefit to both the ministry and the businessperson. Since existing tax laws allow the value of a noncash gift to be claimed at its fair market value, the donor can receive a tax deduction at far above his or her actual cost. For instance, if the donor has a cost basis in his or her company's stock of $10 per share, but the current market value is $100 per share, the tax-deductible gift value of the stock is $100.
Since the stock wasn't actually sold by the donor, there is no capital gains tax due, so the entire gift value is a deduction. If the stock had been sold, and the proceeds donated, the donor would have had to include the sale in total income for tax purposes and then deduct the gift. Donating the stock prior to sale, therefore, represents a significant savings. If the ministry is a nonprofit organization, the stock can then be sold by them without incurring the capital gains tax.