By Larry Weinberg

Land Trust fundraising committee member Larry Weinberg explains his experience with giving gifts of stock. Please note, the Deschutes Land Trust can provide information about how your gift of stock can support the organization but cannot provide legal or tax advice. We encourage all supporters to seek independent financial planning assistance.

Gifts of appreciated stock from a non-retirement account to a nonprofit can have substantial tax benefits in addition to the value of a donation to a nonprofit one supports. Note that you cannot gain these benefits for stocks held within a retirement account such as an IRA. Most brokerage firms (i.e. Vanguard, Fidelity, Morgan Stanley, etc.) will have information and instructions on their website about how to give a gift of stock.

The remarks below will pertain to stocks held in a brokerage account at Vanguard, as this is where I have experience. If you wish to make such a gift, you should speak to your broker, if you have one, or find instructions on the broker’s website. You could transfer stock that has lost value, but the tax benefits will not be there. In fact, you will lose the ability to offset gains with a loss.

To illustrate the process of gifting stock, let’s assume you have 1,000 shares of ABC Company in your brokerage account at the firm WallStreetBrokers. You paid $1 a share for the stock and it is now worth $10 a share. You bought the stock several years ago, so you will have long-term gains if you sell it. You decide to donate 100 shares to the Deschutes Land Trust.

You first go to the WallStreetBrokers website and look up ‘stock transfer’ in the internal search function for the website. This eventually leads to a page with information on how to do a stock transfer. It turns out that you will be able to do everything online. (Some brokers may only do such a transfer with hard copy forms!) The website also lets you know that you will need four pieces of information from the receiving nonprofit:

1. The name of the receiving nonprofit as shown on its account at the brokerage firm where the nonprofit has an account. Our brokerage firm account name is Deschutes Land Trust.
2. The account number for Deschutes Land Trust. Our account number is 168-106726-038.
3. The receiving institution’s name. (For example, everyone says Fidelity, but its formal name is Fidelity Investments Inc.). The Land Trust's receiving institution is Morgan Stanley.
4. The receiving institution’s DTC number. (This is a unique 4-digit number assigned to the firm.) For the Land Trust, the DTC number is 0015.

So how to get this info? It is easy! The required information is on the Land Trust's website or you can pick up the phone and call us at 541-330-0017 to ask us for what you need. Once you have the needed information, you can go back to WallStreetBroker’s website (remember, they are your brokerage firm) and complete the online form with the information from Deschutes Land Trust and submit the form. The form will also need information from you, such as the number of the account you will be using, the name of the stock, the number of shares, etc.

Your work is done! The two brokerage firms will coordinate the transfer and let you know when it occurs. The actual transfer will occur fairly soon, as quickly as a few days, but conceivably a few weeks. The brokerage firms usually have an estimate for how long the process will take if there are no glitches. If your firm has questions, they will contact you.

So now you have made a gift of stock to the Land Trust! You will receive a tax deduction for this gift, subject to any IRS rules such as limits on charitable deductions based on Adjusted Gross Income (AGI). The tricky part and actually the best part is the value of the gift. It will be valued based on the value of the stock when the transfer occurs, and best of all there will be no tax on any gains. In the above example of ABC Company, assuming the value of the stock throughout the period of the transfer was $10, your gift of 100 shares will give you a $1,000 charitable deduction. The actual details of valuing the gift are a bit more complicated, but the good folks at the IRS have rules to figure it out (surprise!) and WallStreetBrokers should be able to help you through the process. Note that you had a $900 gain on the stock, but you do not need to pay tax on this gain.

Suppose instead of giving the Land Trust a gift of stock, you had simply sold the stock and received $1,000 (assuming no fees for selling the stock, which is actually more common these days). You would still have your charitable deduction of $1,000, but when you go to calculate your income tax, the $900 of long-term capital gains on the sale of the stock will show up. At a 15% tax rate, you will need to pay $135 more in taxes—ouch!

A transfer of appreciated stock is a great way to make a donation to Deschutes Land Trust, doesn’t involve any complex transactions or forms on the donor’s part, and provides some tax advantages over selling the stock and then making a gift with the sale proceeds. As usual, if you are considering such a gift, you should talk with your tax professional or at least your broker or brokerage firm.

IMPORTANT NOTE: The Land Trust asks that you or your broker contact Pat Cohen at our office (541-330-0017) to help us watch for the stock you are donating and the number of shares. This is important because your name will NOT be included in the wire transfer to our broker and without this information we are unable to provide a written gift acknowledgment. Please also note that in compliance with IRS guidelines, your written acknowledgment will identify the shares of stock transferred and date of transfer, but not a valuation of the gift.

Learn more:

• Find all the information you need to donate a gift of stock to Deschutes Land Trust