If you hold stock in a closely held business, you may be able to use that stock as a powerful way to support our future.
Closely held stock* is most often used to support our work in the form of:
An outright gift. You can make a gift of closely held stock as long as the constituting documentation for the business permits additional owners and it is debt-free. The donation of closely held stock first requires you to value the interest in the business entity.
Review this checklist to see if you may benefit from donating closely held stock. Then consult your professional legal and tax advisors to learn how to benefit from this tax-efficient strategy while making a difference.
- You are a majority shareholder in a closely held corporation.
- You would like to remove retained earnings from the corporation, without having them taxed again.
- You would like to maintain a controlling position in the corporation’s outstanding stock.
- You would like to avoid capital gains taxes on the shares you donate to International Rescue Committee.
- You would like to receive a federal income tax deduction for the full appraised value of the gift.
- You would like to support our mission.
A gift in your will or living trust. If you are not ready to make a gift of these assets during your lifetime, consider making a gift of all or a portion of your closely held stock through a bequest in your will or living trust. If your estate is worth more than the current exemption amount, you will receive a federal estate tax charitable deduction for the value of your gift.
A charitable gift annuity. Funding a charitable gift annuity with closely held stock provides you with fixed payments for life and allows you to support our work. But it can also offer numerous financial benefits. You will receive a federal income tax deduction. And, if you use appreciated stock, you can eliminate capital gains tax on a portion of the gift and spread the rest of the gain over your life expectancy. You may contribute stock in either a C or S corporation in exchange for a charitable gift annuity. A qualified independent appraisal must value the contributed shares whenever the deduction exceeds $10,000. The appraisal is required in order to substantiate your federal income tax deduction.
A charitable remainder trust. You may be able to use all or a portion of your closely held stock to fund a charitable remainder trust. If you do, you receive a federal income tax deduction on the appraised value of your gift, and you pay no capital gains taxes at the time of the gift. The trust pays you or other named individuals payments every year for life or a term of years. When the trust term ends, the remaining principal goes to the IRC as a lump sum. This type of trust may not own S Corporation stock.
A charitable lead trust. In certain situations, you can create a charitable lead trust that allows you to pass your closely held stock to your heirs after supporting the IRC. The trust makes regular payments to the IRC for a period measured by a fixed term of years or the lives of one or more individuals. After the term ends, the remaining assets, including any appreciation, pass to your heirs. A properly designed lead trust will produce an estate or gift tax deduction for the value of that portion of the trust designated for the IRC.
* A gift of closely held stock requires special handling, so you should always consult with your legal or tax advisor first.