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Author: gen151 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121585  
Subject: donating stock Date: 7/26/1999 6:14 PM
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I'm interested in donating stock that I received through exercising employee incentive stock options. I figure that I can meet my charity goals and not get hit with capital gains taxes if I were to sell the stock and donate the proceeds.

Here's what I mean:

1/1/99 - exercised 100 options at a cost of 15cnts/share. (cost=$15)

7/26/99 - give those same 100 shares to church when FMV is $30.00/share. (value=$3000)

So I can now claim a charitable contribution of $3000 and the church gets the full $3000 value since it doesn't have to pay cap gains taxes that I would have had to if I had sold them myself.

Am I missing anything? This seems too easy.

Thanks, gen151
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Author: wiedmann Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17735 of 121585
Subject: Re: donating stock Date: 7/28/1999 7:48 PM
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1/1/99 - exercised 100 options at a cost of 15cnts/share. (cost=$15)

7/26/99 - give those same 100 shares to church when FMV is $30.00/share. (value=$3000)


You're not missing anything in terms of the benefits of donating stock rather than selling the stock and then donating the cash.

The problem with your scenario, though, is that you didn't hold your stock for a year, so this will end up being a disqualifying disposition, meaning you will have to claim the bargain element (FMV @ 1/1/99 - $15) as income.

In fact, if my understanding is correct, since you didn't hold the stock for a year, you will only be allowed to deduct the amount of your basis (which I believe is $15), not the FMV of your stock.

Perhaps some of the experts will correct my understanding, but I was recently in the same situation and concluded that it doesn't make sense to donate unless you've held the stock for at least a year (2 years from the grant).

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Author: gen151 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17749 of 121585
Subject: Re: donating stock Date: 7/29/1999 1:28 PM
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Perhaps some of the experts will correct my understanding, but I was recently in the same situation and concluded that it doesn't make sense to donate unless you've held the stock for at least a year (2 years from the grant).
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weidmann, thanks for your response.

I've been doing some reading myself, so I now know about that requirement to hold the stock for 1 year. But the 2 yrs. from grant date is news! I was thinking about just waiting that year after I exercised; then I'd take advantage of being able to deduct the FMV.

I guess the 2 yr. holding period isn't much of a concern since I exercised 1 yr. after they were granted. It would prob. be a factor if I get accelerated vesting and exercise the options within less than 1 yr. from grant date.

Well, I appreciate your help. I hope the "experts" do chime in and correct any errors on our part.

-gen151

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