Click here to make an online donation

Individual Giving

Corporate Giving

Planned Giving Ideas

Planned Giving

• Special Olympics Virginia

3212 Skipwith Road, Suite 100
Richmond, VA 23294
Questions? Call (804) 346-5544 or 1-800-932-GOLD.
E-mail us at: info@specialolympicsva.org

• Recognition as sponsor in event publications, news releases, and promotional materials
• On-site opportunities to display banners and other signage
• Plaque of recognition given at SOVA events
• Invitations for company representatives to selected receptions, competitions and events
• Positive association with SOVA, named America's most credible charity in 1995 by The Chronicle of Philanthropy
• Listing as sponsor in newsletters, program yearbook, and on our website on the internet
• Establishes your company as community-minded
• Allows employee involvement as volunteers outside of the work place
• Opportunity to distribute company materials and participant gifts

Planned Giving Ideas

CAPTURING THE BENEFITS OF APPRECIATED STOCK THROUGH CHARITABLE PLANNING

Every year we seem to hear the same messages: "The stock market can't possibly go any higher. " Or, "Values don't support current stock prices." But for years now, the stock market has been on an unprecedented run. Despite the recent severe turbulence, prices have reached levels few would have dreamed possible a decade ago.

While history has proven the naysayers wrong, investors do become more concerned about protecting their gains as the market exhibits signs of severe volatility. Not only are investors concerned about the market turning against them, they are concerned about ways to capitalize on their good fortune without paying a tax on capital gain.

Recent tax-law changes have eased the capital-gain tax burden somewhat. But taxes still may extract a significant percentage of your profits when you sell your appreciated securities. So what options do you have to benefit from the full value of your appreciated investments?

It is surprising to many people that some of the best strategies for reaping the benefits of highly appreciated securities are accessible through charitable planning. Although most people think of giving cash when they think of making a gift to Special Olympics, many donors discover they generate even better benefits if they give long-term appreciated stock. These benefits may include both greater tax savings and, in regard to other planning goals, increased cash flow.

During stock market volatility, the number of people searching for the best ways to capitalize on their gain increases. You may be among that number. In this issue of Passing The Torch, we answer some of the most frequently asked questions about the strategies and opportunities for giving highly appreciated securities. We hope you find the discussions provocative and helpful as you engage in your own planning.

Why would I want to give stock instead of cash?

You receive a double benefit from contributing long-term appreciated stock. You receive a charitable income-tax deduction for your gift, and you avoid paying capital-gain tax on the paper gain. (Note: The maximum capital-gain tax rate is now 20% for stock held more than 12 months.)

My stock is worth a lot more than I paid for it. Wouldn't I get a higher deduction if I gave cash?

No, not at all. As long as you have held the stock for more than 12 months, you can deduct its full fair-market value at the time of your gift regardless of how much you paid for it. If, for example, you donate publically traded securities valued at $40,000 purchased several years ago for $10,000, your deduction will be the full $40,000 value.

Can I take the entire deduction in the year I make the gift?

That depends on the size of your gift and the amount of your adjusted gross income (AGI). With gifts of long-term appreciated securities, your charitable deduction is limited to 30% of your AGI. Assuming your only contribution is the $40,000 in securities and your AGI is $100,000, your deduction will be limited to $30,000 for the year of the gift.

Will I lose the deduction amount that I can't use because of the 30% limitation?

The unused portion can generally be carried forward and deducted for up to five additional years. In the example above, you could deduct the remaining $10,000 of the deduction in the next year, assuming your AGI and other gifts are at levels that permit the deduction. (Current gifts are deductible ahead of the unused deductions carried over from prior years.)

Can I ever deduct more than 30% for gifts of long-term appreciated stock?

Yes. In special cases, you can choose to deduct such gifts to the extent of 50% of your AGI. However, there is a trade-off for increasing the limit. Your charitable deduction will be limited to your cost basis, so you will not be able to take a deduction for the appreciation element of your investment.

When would taking advantage of this special election be of benefit to me?

If you are enjoying an unusually high income this year and are interested in deducting the maximum amount, it is worth considering this special deduction if the appreciation element of your investment is not large.

What effect does a charitable deduction have on my taxes?

The charitable deduction reduces your federal income-tax liability. The tax savings generated by a charitable deduction depends on your marginal tax bracket. If you are in the 31% bracket, for example, a $40,000 deduction will save you $12,400 in taxes ($40,000 x 31%). Ignoring any other savings, this will reduce the after-tax cost of your $40,000 gift to $27,600 ($40,000 - $12,400).

Can I expect other tax savings when I make a gift of long-term, capital-gain securities?

Yes. As mentioned earlier, you obtain a double benefit when you make a contribution of appreciated stock. In addition to the charitable deduction, you also avoid capital-gain tax on the stock's appreciation. For example, if you are in the 31% tax bracket and you sell for $40,000 a block of securities that cost you $10,000, you will pay a capital-gain tax of $6,000 on the $30,000 appreciation at the 20% capital-gain tax rate ($30,000 x 20%). If, however, you contribute the property to Special Olympics, the capital-gain tax savings combined with the $12,400 in tax savings from the charitable deduction will reduce your after-tax cost of the $40,000 gift to $21,600 ($40,000 - $12,400 - $6,000).

I have stock that still has significant potential. Could I use it to fund my charitable gifts anyway?

Absolutely. By using that stock instead of cash, you will receive a deduction for its full fair-market value and avoid tax on the appreciation, as noted above. Then you can repurchase the same amount of the same stock with cash, thereby increasing your basis in the stock. This will lower your capital-gain tax when and if you sell the stock in the future.

Example: John and Jean Jones are enthusiastic about the future of XYZ, Inc. They bought it several years ago for $5,000, and it is now worth $20,000. The Joneses want to make a $20,000 gift to Special Olympics and had planned on giving cash. However, after talking with their advisors, they realize they can get the same tax-deduction benefits from a gift of their stock and lower their future tax obligations. They give the stock to us and buy $20,000 worth of XYZ in the open market. If it rises to, say, $50,000 and they sell, the Joneses will have a taxable gain of $30,000. Had they given us cash and held the stock, their gain would have been $45,000. Under these assumptions, this strategy would save the Joneses as much as $3,000 in future capital-gain tax.

Although most of my investments have done well, I do have one stock that is worth quite a bit less than I paid for it. Should I consider using it to make a charitable gift?

Not necessarily. You might consider selling the investment and using the cash proceeds for your gift. If you sell, you can recognize the loss you incur on the sale to offset other capital gain and, in some cases, ordinary income. However, if you make a gift of the stock, you can take a deduction for whatever it is worth at the time of your gift but cannot recognize or benefit from the loss.

CHARITABLE GIFT PLANS USING APPRECIATED SECURITIES

The double benefit of receiving a charitable deduction and avoiding capital-gain tax for an outright gift of appreciated stock is very appealing. However, I need income. Is it possible to donate the stock and receive income?

Yes. With several arrangements, including the charitable gift annuity, you can transfer the securities now and receive a stream of payments for yourself and/or another beneficiary either for life or a term of years. The size of the payments you receive depends on the plan you choose. With some plans you have the security of fixed payments; with others, variable payments that may increase over time.

If I receive payments, do I still receive tax benefits?

In most instances you are entitled to a charitable deduction for the value of the remainder that will pass to charity. This will be less than the face value of the securities but still may be substantial. You also avoid tax on the capital gain just as you would by giving them outright. With some gift plans, you will be taxed on part of the appreciation, but only as you receive the payments.

Can a gift of appreciated securities actually increase my spendable income?

Yes. Many investors are frustrated when their stocks pay little or no income and feel "locked in'' because converting assets to income-producing property entails paying a significant capital-gain tax, leaving only after-tax sale proceeds for reinvestment. However, when you transfer appreciated stock for a gift arrangement that provides you with a stream of payments for life, all proceeds-since you avoid tax on the capital gain-are preserved to generate those payments. As a result, your spendable cash may not only be more than you were receiving from the stock but also more than you would receive if you sold the stock and reinvested the proceeds yourself.

Example: Suppose Mr. A, 65, owns growth stock with a fair-market value of $100,000 (purchased a number of years ago for $35,000). The stock is currently paying him only $2,000 in dividends a year. If he establishes a gift plan with Special Olympics that will pay him $7,000 a year for life, he will be entitled to a charitable deduction of $38,147, avoid the tax on the $65,000 gain, and increase his spendable income by $5,000 a year.

How can I learn more about the benefits of contributing appreciated securities?

If you would like more information on these benefits, simply return the enclosed card for a -complimentary copy of our booklet, Giving Appreciated Property: How to Get the Most Out of It

This publication is written and published on behalf of Special Olympics by Pentera, Inc., which is solely responsible for its content, and is not intended to constitute legal or tax advice. For advice and assistance in specific cases, the services of an attorney or other professional advisor should be obtained.

Gaining Benefits While Benefiting Your Favorite Charity

As the stock market passes 10,000 and sets new highs, investors become more wary of protecting their gains. Not only do they fear a market downturn, but they are also concerned with ways to capitalize on their good fortune without paying capital gains tax.

Recent changes have eased the burden but Washington may still take a significant percentage of your profits when you sell appreciated securities. How can you maximize your benefit from your appreciated investments? Some of the best strategies are through charitable planning.

Why would I want to give you stock instead of cash?

You receive a double benefit from contributing long-term appreciated stock. You receive the charitable income-tax deduction for the gift AND avoid paying capital gain tax on the stock's appreciation.

My stock is worth a lot more than I paid for it. Wouldn't I get a higher deduction if I gave cash?

No. As long as you have held the stock for more than 12 months, you can deduct the full fair market value of the stock at the time of the gift regardless of how much you paid for it.

Can I take the entire deduction in the year I make the gift?

That depends on the size of your gift and the amount of your adjusted gross income (AGI). With a gift of long-term appreciated securities, your charitable deduction in any year is limited to 30% of your AGI. Assuming your gift of securities at $20,000 is your only contribution for the year and your AGI is $50,000, your deduction will be $15,000 for the year of the gift. The unused portion can generally be carried forward and deducted for up to five additional years.

What effect does a charitable deduction have on my taxes?

The charitable deduction reduces your federal income tax liability. The tax savings generated by a charitable deduction depends on your marginal tax bracket. If you are in the 31% bracket, for example, a $20,000 deduction will save you $6,200 in taxes ($20,000 x 31%). Ignoring any other savings, this will reduce the after-tax cost of your $20,000 gift to $13,800.

Special Olympics Virginia would be happy to discuss the many charitable investment options available to you. Your support is vital to the future success of Special Olympics and the nearly 13,000 athletes that participate in the Commonwealth. Please call 1-800-932-GOLD to find out more about charitable planning.

The Spirit of Special Olympics: Skill, Courage, Sharing, Joy.