Securities and Real Estate 

 Popular alternatives to cash are gifts of appreciated property, such as securities and real estate. Such gifts generate a double tax benefit. In addition to receiving an income-tax charitable deduction or the full fair-market value of the property, the donor escapes any potential tax on the capital-gain element in the gifted property. Note: To qualify for this double tax benefit, the property must have been held for more than one year. 

For example: Mr. Smith owns securities valued at $22,000, which he purchased three years ago for $2,000. Because he is in the 31% tax bracket, Mr. Smith's gift of the securities to the Community Foundation produces a $22,000 deduction that saves him $6,820 in income taxes (31% of $22,000). 

In addition, Mr. Smith avoids capital-gain tax on his $20,000 paper profit, which saves a further $4,000 ($20,000 gain x 20%). The net cost of his $22,000 gift is $11,180 ($22,000 less $6,820 less $4,000).  

The full fair-market value of gifts of long-term, appreciated property is deductible up to 30% of a donor's AGI. Any amount over the 30% ceiling can be carried forward for up to five years. 

Note: A donor considering a gift of property that has declined in value would be better off selling the property to realize a deductible loss and then contributing the proceeds to charity. This ensures recognition and deductibility of the loss. 

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