Transferring Appreciated Assets to your Temple or Project through VCF
Appreciated assets which are popular for donating typically include stocks, bonds, mutual funds and real estate. Gifts of appreciated securities are a popular way to benefit the temple while sheltering the gains from taxes. By giving in this way, the donor is allowing the temple to put to work 100% of the market value of the long-term appreciated securities, thus avoiding paying tax on the “built-in” capital gain.
For example let’s say you own an appreciated position of GE, now worth $10,000, originally acquired for $2,000. If you sold the stock you would be subject to capital gains on the $8,000 realized gain – a $1,200 tax bill. If you donate the stock instead, you can deduct the full amount of its current value as a charitable gift. For an individual who itemizes deductions and whose marginal tax bracket is 33%, the savings, $3,333 in federal taxes – added to the $1,200 in capital gains savings – brings to $4,533 the tax savings for making your gift in stock. A cash gift would reduce taxable income by $10,000, thus saving $3,333 in income tax. In some cases the charitable donation may put the donor in a lower tax bracket thus further reducing one’s overall tax burden even more. Actual tax benefits will vary depending on the details of the overall income tax situation, the type of property contributed, and the type of organization receiving your gift.
In addition to tax benefits, donors often have additional reasons for choosing to give stock. These might include lessening a concentrated position in a particular stock or preserving available cash for other needs.
The following is the procedure to contribute registered securities to the temple.
Q: How is the transfer initiated?
A: Contact your broker for their form or instructions for a DTC or partial transfer. You want an electronic transfer, not share certificates. Generally, your broker will need the following information in writing (see sample letter at end):
* Name of the account holder (i.e. you and perhaps your spouse)
* your brokerage account number and possibly your Social Security number
* your contact information (telephone, email)
* Number of shares and symbol of shares to be transferred.
* Where to send the shares:
Name of the brokerage: TD Ameritrade Clearing, Inc.
Name on the account: Vedic Community Foundation, Inc.
Account number: 866-257200
DTC Number: 0188 Your signature.
Q: What should I ask my broker?
A: A good starting point:
* What is your procedure for DTC-ing shares? Do you have a form you can send?
* How soon after you receive my request will the transfer take place?
* Will you accept a fax or must I mail the form so you have an original signature?
* What is your mailing address (or fax number)? To whose attention?
* Do you require the signature of all account holders?
* Do you require a medallion signature guarantee? (Generally applies only to a very large sum, say $50,000. The branch of your local bank may provide one.)
* Do you charge a fee for this? Will you waive it for transfer to a charity?
* If I designate particular shares by acquisition date or certificate number, will you acknowledge it in writing?
* (If a full service broker who offers advice): Is this transfer a good idea?
Q: How will the Temple or Project know the gift is from me?
A: Glad you asked. We won't know unless you tell us. Please call or email the finance office and tell us the number of shares, company name, your brokerage company name, approximate date of the transfer, and how you want the gift applied. We will then inform you and the charitable project the securities have arrived. You will then receive a Donation Receipt Letter from VCF stating the amount of the donation (this is the value of the security priced on the date received) and your designated charity. You will want to keep this for tax purposes.
Q: How long does a transfer of shares typically take?
A: A DTC (electronic transfer) can often be done in less than a week. However, if you're planning a gift you want to deduct in the current tax year, we suggest you start the process no later than mid-December. It may take your broker longer than a week to complete the transfer, and financial institutions become very busy in late December. A transfer of shares held in certificate form takes much longer. Under IRS regulations, VCF has no leeway to back-date receipt of your gift if the transfer is delayed. For your convenience, you may apply it to the current or future pledge year.
Q: What amount will be credited as my contribution to my charity?
A: Typically this is the full amount of the security as it is priced on at market closing on the day it is received. The net proceeds from the sale of the security, which is the amount our discount brokerage firm sells the stock for, less a 1.5%VCF processing charge is what the charity will actually receive. It is the policy of VCF to sell stock at market upon receipt.
Example Letter of Instructions to your Broker
To: Edward Jones & Company
123 126th Ave NE
Gainesville, FL 32638
From: Devotee Giver
108 Goloka Way
Vrindavan, FL 12345
Phone: 123-555-1212
Email: devotee@verizon.net
Account number: 1234-56-789
SSN: 108-10-8108
Date: August 21, 201x
Partial Transfer
Please DTC 100 shares of General Electric (GE)
To: Vedic Community Foundation, Inc. for (name of temple or project)
Name on the account: Vedic Community Foundation, Inc.
Account number: 866-257200
DTC Number: 0188
[Optional: The shares being transferred are from the block I acquired on January 14, 1998. Please provide written acknowledgement of this to the address above.]
Please call me with any questions.
Regards,(signed) Devotee Giver
For example let’s say you own an appreciated position of GE, now worth $10,000, originally acquired for $2,000. If you sold the stock you would be subject to capital gains on the $8,000 realized gain – a $1,200 tax bill. If you donate the stock instead, you can deduct the full amount of its current value as a charitable gift. For an individual who itemizes deductions and whose marginal tax bracket is 33%, the savings, $3,333 in federal taxes – added to the $1,200 in capital gains savings – brings to $4,533 the tax savings for making your gift in stock. A cash gift would reduce taxable income by $10,000, thus saving $3,333 in income tax. In some cases the charitable donation may put the donor in a lower tax bracket thus further reducing one’s overall tax burden even more. Actual tax benefits will vary depending on the details of the overall income tax situation, the type of property contributed, and the type of organization receiving your gift.
In addition to tax benefits, donors often have additional reasons for choosing to give stock. These might include lessening a concentrated position in a particular stock or preserving available cash for other needs.
The following is the procedure to contribute registered securities to the temple.
Q: How is the transfer initiated?
A: Contact your broker for their form or instructions for a DTC or partial transfer. You want an electronic transfer, not share certificates. Generally, your broker will need the following information in writing (see sample letter at end):
* Name of the account holder (i.e. you and perhaps your spouse)
* your brokerage account number and possibly your Social Security number
* your contact information (telephone, email)
* Number of shares and symbol of shares to be transferred.
* Where to send the shares:
Name of the brokerage: TD Ameritrade Clearing, Inc.
Name on the account: Vedic Community Foundation, Inc.
Account number: 866-257200
DTC Number: 0188 Your signature.
Q: What should I ask my broker?
A: A good starting point:
* What is your procedure for DTC-ing shares? Do you have a form you can send?
* How soon after you receive my request will the transfer take place?
* Will you accept a fax or must I mail the form so you have an original signature?
* What is your mailing address (or fax number)? To whose attention?
* Do you require the signature of all account holders?
* Do you require a medallion signature guarantee? (Generally applies only to a very large sum, say $50,000. The branch of your local bank may provide one.)
* Do you charge a fee for this? Will you waive it for transfer to a charity?
* If I designate particular shares by acquisition date or certificate number, will you acknowledge it in writing?
* (If a full service broker who offers advice): Is this transfer a good idea?
Q: How will the Temple or Project know the gift is from me?
A: Glad you asked. We won't know unless you tell us. Please call or email the finance office and tell us the number of shares, company name, your brokerage company name, approximate date of the transfer, and how you want the gift applied. We will then inform you and the charitable project the securities have arrived. You will then receive a Donation Receipt Letter from VCF stating the amount of the donation (this is the value of the security priced on the date received) and your designated charity. You will want to keep this for tax purposes.
Q: How long does a transfer of shares typically take?
A: A DTC (electronic transfer) can often be done in less than a week. However, if you're planning a gift you want to deduct in the current tax year, we suggest you start the process no later than mid-December. It may take your broker longer than a week to complete the transfer, and financial institutions become very busy in late December. A transfer of shares held in certificate form takes much longer. Under IRS regulations, VCF has no leeway to back-date receipt of your gift if the transfer is delayed. For your convenience, you may apply it to the current or future pledge year.
Q: What amount will be credited as my contribution to my charity?
A: Typically this is the full amount of the security as it is priced on at market closing on the day it is received. The net proceeds from the sale of the security, which is the amount our discount brokerage firm sells the stock for, less a 1.5%VCF processing charge is what the charity will actually receive. It is the policy of VCF to sell stock at market upon receipt.
Example Letter of Instructions to your Broker
To: Edward Jones & Company
123 126th Ave NE
Gainesville, FL 32638
From: Devotee Giver
108 Goloka Way
Vrindavan, FL 12345
Phone: 123-555-1212
Email: devotee@verizon.net
Account number: 1234-56-789
SSN: 108-10-8108
Date: August 21, 201x
Partial Transfer
Please DTC 100 shares of General Electric (GE)
To: Vedic Community Foundation, Inc. for (name of temple or project)
Name on the account: Vedic Community Foundation, Inc.
Account number: 866-257200
DTC Number: 0188
[Optional: The shares being transferred are from the block I acquired on January 14, 1998. Please provide written acknowledgement of this to the address above.]
Please call me with any questions.
Regards,(signed) Devotee Giver