Giving Stock Directly to Charity - Episode 93

If you have significant capital gains attached to highly appreciated stock positions in your taxable accounts and are routinely giving cash to charity... check this episode out! 

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JOSH KLOOZ, CFP®, MBA
WEALTH ADVISOR

Phone 281.719.0036
Text 281.699.8691
Fax 281.719.0156
jklooz@carsonwealth.com

1780 Hughes Landing | Suite 570
The Woodlands, TX 77380

Music by bensound.com

Transcript

Speaker 1: 0:47

Thank you again for joining the wisdom of wealth podcast. I want to take a brief minute and talk today about a topic that sometimes, I think, goes under appreciated and often under discussed in Conference rooms across the country, and by that I mean the concept of giving highly appreciated stock to charity. So what are we talking about? To illustrate, I'm gonna go ahead and walk through a hypothetical situation. Let's assume a hypothetical couple by the name of Bob and Sharon have come to meet. They have an annual income, combined salary income, of three hundred thousand dollars and I Notice before our meeting, when reviewing their tax returns, that they gave thirty thousand dollars to charity last year, just coincidentally a Lot of company stock from Bob's company that is currently worth $30,000 as well. They have a basis of twenty thousand dollars, or rather ten thousand dollars in that Lot of company stock. And so, as we're walking through the process, we get to the the point of these shares and Bob's company and Bob and Sharon they they share with me that. Hey, you know, we want to go ahead and diversify out of that centralized position and we would like to go ahead and and sell those shares this year. Well, in this instance, my goal is, you know, hey, if it's the end of the year, or we should have done this previously, but the next year we should consider giving those shares to charity, if we're going to sell them anyway, or even that that current year, we should consider giving those those shares directly to a charity or charities of their choice. And here's why, at the end of the day, rather than having three hundred thousand plus twenty thousand dollars worth of capital gains In their, their favor, they can give those, those shares directly to charity and they will be taken against their income.

Speaker 1: 2:59

Now, if you're paying attention, you realize that, hey, I I haven't really made this example Very conducive, because it it's, it's right in the realm of the standardized deduction, and, and you're correct. And so the reason being I just want to illustrate For Bob and Sharon the difference that giving the stock directly to charity versus having it paying capital gains on it plays in their life. And that comes out to three thousand seven hundred and sixty dollars in total tax dollars. And so for those of you that you know, subscribed to my newsletter, you'll actually see this in in more detail. I have two Tax estimate snapshots and in the newsletter. But think about that one small conversation could be worth over thirty seven hundred dollars simply because Someone did their homework before they got to the meeting and actually did holistic planning. Just a small tweak like that Makes a huge difference. The best part about this is that Bob and Sharon still get to accomplish all of their goals in this situation. They get to diversify their portfolio, they get to maintain their standard of income Right and or their standard charitable giving, and they also get to give. They get to keep more of their their wealth. What's not to like about that? So I get it this.

Speaker 1: 4:31

This example is very simple and that's by design. I don't want to belabor this point. The concept is is still pretty profound.

Speaker 1: 4:40

I joke with people all the time that typically stewardship and the federal government aren't brought up in the same context, and I get it. I understand 100% that the fact that we are even paying taxes is a blessing. I am very thankful for all the services that I take for granted in our current environment, but at the end of the day, if you're able to give resources to institutions that you care about and are passionate about, that's really not even a fair comparison between the federal government and something that you truly are invested in and care about overall when it comes to stewardship perspective, something that goes to an organization and gets mixed multiple times and you understand conceptually how it happens, or an institution or organization that might be local and you can actually see physically, within your own community, the outputs. It's not a fair comparison. I'd rest my case Circling back to the above illustration.

Speaker 1: 5:43

I want to just camp out on this point one last time.

Speaker 1: 5:48

This only happens because you are actually working with someone who is doing holistic planning, and by that I mean someone who is not just concerned about your investments, who is not just concerned about financial planning to make sure that you don't run out of money, but somebody who's actually looking at your tax returns.

Speaker 1: 6:07

And I would go a step further and say someone who's actually looking at your estate plan and making sure that everything is in line and making sure that you are taken care of and looking around those corners for you. I can't encourage you enough. Partner with someone that you are not only you are comfortable with, but that you could see sitting down at your family's kitchen table and partnering with your family through the different questions that your family is going to encounter inevitably throughout the course of life. I'll leave things there. Thank you so much for your time, as always, if you have any questions, please reach out at your earliest convenience. Also, please like and rate the podcast, the newsletter and our YouTube channel, as this helps us reach and serve additional listeners and viewers. Thank you again for your time and always know that I and my family are wishing you continued truth, beauty and goodness in the road ahead. Have a great day.