Want to save taxes? Give assets

It's tax time! Are you grimacing at your bottom line? Here's a solution: give more. Better yet, give more and give wisely. Writing a check is the predictable way to give to churches and ministries, but if maximizing your giving is important, consider giving assets, especially the appreciated ones that will be taxed when you sell them.

Letπs look at an example: Joe is in the 25% federal tax bracket and 9% for California. When he writes a check to his church for $10,000, he saves $3,400. Not a bad deal.

Joe, however, has a stock worth $10,000 for which he paid $5,000 several years ago. By giving the stock to his church, instead of the cash, he saves the same $3400 plus another $1200 in capital gains taxes that he would have incurred when he sold the stock. Letπs recap: The churchπs benefit: $10,000. Joeπs tax savings: $4,600 —almost half! His net cost: $5,400.

The numbers would differ if Joeπs tax bracket changed or if the stock had a higher or lower gain, but the principle remains: Giving appreciated assets can multiply the tax benefit.

Joe took his strategy one step further. The stock he gave to the church was his favorite, and he hated to not own it anymore. So, he bought it again with the $10,000 he was going to give out of his checking account. His ≥re-purchase≤ also established a higher cost basis of $10,000 as compared to his original $5,000.

Stocks, bonds, mutual funds, real estate, and business interests can be gifted. If your church or charity is not set up to accept assets and sell them, itπs not a problem. A common solution is a ≥donor-advised≤ giving fund available through community foundations and several mutual fund companies. By giving the asset to your personal giving fund, the foundation can receive and liquidate the asset. You can then advise them where to give the proceeds.

The National Christian Foundation is one such organization that encourages donor-advised giving funds. They often hear the question, ≥What if I give the asset to the foundation, and they donπt follow my advice?≤

Steve Chapman, vice president of NCF assures, ≥As long as the ultimate recipient is an IRS recognized non-profit charity and doesnπt conflict with the Christian faith as outlined in our statement of faith, we make the grant. Of the few rejections we do make, the donors are usually glad we communicated our reasoning as it came down to an issue they were not aware of.≤

Chapman adds, ≥Our job is to help donors give easier and wiser. For donors who are giving from their wealth or non-cash assets for the first time, especially with larger assets like real estate and businesses, it is often a major epiphany when they connect their tax savings and the opportunity to fund the organizations closest to their heart. On the other side, we have had people literally break down in tears when they sell their business and then contact us wanting to give. They realize that giving the cash proceeds can carry far less impact than giving the asset prior to the sale.≤

Seek the counsel of your tax and financial advisors. Joeπs situation was presented simply, but sorting out the details and complexities of your personal situation with qualified advisors is necessary.

Giving from the resources God has entrusted to you is an act of faithfulness, and what a joy it can be! Maximize your gifts by giving appreciated assets. ...And that is just one more Principle of Prosperity!

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Anthony Saffer, CFP of Coleman & Johnson Financial Advisors, Inc. develops principled financial planning strategies. Contact (619) 282-3288 for questions or a personal appointment. Advisory services offered through Financial Network Investment Corporation, Member SIPC. Coleman & Johnson and Financial Network are not affiliated companies.