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<<Thanks for responding. I will talk to a tax person too. One more question. Previous donors have asked us about donating stock to our organization;especially stock that has appreciated considerably. Can you explain the tax incentives for doing this? >>

Briefly, Cub, it works like this...

If a taxpayer makes a charitable contribution of qualified qppreciated stock (generally stock held for more than one year) to a qualified charitable organization, everybody wins (except Uncle Sammy).

Say you have a stock that you bought over a year ago. 100 shares at $10/share. The shares are now worth $20/stub. If you were to sell the stock, you would have a gain of $1,000. Taxes on that would be $280 (at least...there could also be state tax issues), so you have $720 remaining after tax. If you make a charitable contribution of the $1,720 (the original $1,000 plus your after tax gain), you'll probably get a tax deduction of about $480.

But lets say that you contribute the shares directly to the charitable organization. You would get a tax deduction for $2,000 (the FMV of the shares at the date of the donation), AND you would NOT have to report any of the gain on your tax return. Therefore, you can make this donation without any personal tax issues. The tax savings on the $2k donation will save you about $560 in taxes. The charity will receive more money to do "good works" with, and Uncle Sammy will receive less tax dollars to squander. See it?

Total benefit to the charity: $1,720 vs. $2000
Capital Gains Taxes Paid: $280 vs. -0-
Charitable Contribution Deduction: $480 vs. $560

Which is why this technique is so valuable. I have an additional post regarding gifts of appreciated stock in the Taxes Frequently Asked Questions area (get there from the main screen/home page via the Fools School to read all about it).

Hope this helps...
TMF Taxes
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