The Justice Love Foundation

Increase your gift to the Foundation—and your tax deduction—with a simple strategy.

 

Thinking About Donating Privately Held C-corp stock to The Justice Love Foundation

Own privately held C-corp stock in a company, consider donating a portion of your holdings to The Justice Love Foundation

Do you own privately held C-corp stock in a company that may be sold or are considering donating a portion of your holdings to charity? By donating the stock to the Foundation you can take advantage of two major benefits:

1. Take an income tax deduction for the fair market value of the private company shares on the date of the contribution.

2. Potentially eliminate the capital gains tax on the contributed shares by contributing these shares directly to the Justice Love Foundation.

There’s also a third benefit of donating privately held C-corp stock to the Foundation—the opportunity to recommend how the contribution is invested on a tax-free basis, potentially increasing the amount of charitable support over time.

Fair market value of the stock as determined by a qualified appraisal. Stock must be held for more than one year. 

This assumes all realized gains are subject to the maximum federal long-term capital gains tax rate of 20%, as well as the Medicare surtax of 3.8%.

How does it work?

When you make an irrevocable contribution of long-term, privately held C-corp stock to our Foundation, you are generally entitled to a fair market value deduction for the contribution.  Because Justice Love Foundation is a 501(c)(3) public charity, capital gains taxes don’t apply on the sale of C-corporation stock you donate. That means your tax deduction AND your gift to charity may be larger.

 A Larger Gift and a Larger Deduction!

 By donating a portion of your holdings to The Justice Love Foundation you can take advantage of two major benefits:  

  1. An increased income tax deduction based on  the fair market value.
  2. Possibly eliminate the capital gains tax on the contributed shares by contributing these shares directly to the Justice Love Foundation.

Fair market value of the stock must be determined by a qualified appraisal. Stock must be held for more than one year.   This assumes all realized gains are subject to the maximum federal long-term capital gains tax rate of 20%, as well as the Medicare surtax of 3.8%.

 

Tax benefits of donating stock to charity

The donor will determine the fair market value of the privately held stock by obtaining a qualified independent appraisal, for assets held for more than one year.  Total cost basis is the original value of an asset, in this case the C-corp stock.  This assumes all realized gains are subject to the maximum federal long-term capital gains tax rate of 20% and the Medicare surtax of 3.8%. This does not take into account state or local taxes, if any.  Amount of the proposed donation is the fair market value of the appreciated securities held more than one year. This example assumes that Kathy obtained a qualified independent appraisal to determine the fair market value of the securities.

The discount rate is an estimate reflective of applied discount rates generally seen in the valuations of privately held companies. This assumes a rough range of 5–10% discount for a minority interest and lack of control. Please note that applied discounts could be higher or lower depending on the nature of the interest and the company itself. Please note this number refers to the amount of charitable deductions available based on the 8% valuation discount.  This assumes there is a stock sale and no ordinary income attributed to the sale with a zero cost basis. This also assumes no Unrelated Business Income Tax (UBIT).

 

Donating Privately Held C-corp stock to our Foundation: It’s an excellent choice

Potential benefits of giving an interest in a company directly to The Justice Love Foundation:

  • Provide more money to our Rapid Response Fund, Opportunity Fund and Operating activities.
  • Minimize capital gains tax exposure
  • Take a tax deduction

Let Our Donations Team Assist with a Plan

Nearly half of high-net-worth donors do not take advantage of tax-saving methods that could help them save and give more. Let our Donations Team help you with the opportunity to position yourself by having a quick conversation on the best structure for charitable giving to the Foundation. Please take your time and submit your questions below, we will respond as quickly as possible.

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