A smart way to help the AAM – and avoid taxes!

If you are thinking about making a year- end gift to the American Air Museum in Britain, consider giving a gift of appreciated stock INSTEAD of cash. It’s a smart financial move.

Here’s  why…

If you own stock for more than one year that has gone up in value, you can donate the stock to the museum, get a deduction equal to the fair market value of the stock at the time of the transfer and never pay capital gains tax on the appreciated value of the stock.

Example: Judy owns 1,000 shares of Widget Company stock, which she paid $1,000 for in 2001. They are worth $10,000 today. She gives the stock to the American Air Museum in Britain and deducts its $10,000 fair market value as a charitable contribution. Judy need not pay the 15% capital gains tax on the $9,000 gain in the value of her stock. The AAM sells the stock and pays no taxes on the $10,000 it receives.

Had Judy sold the stock (and donated the cash) she would have had to pay a $1,350 long-term capital gains tax on her $9,000 profit (15% x $9,000 = $1,350). This would have left her with only $8,650 from the stock sale to donate to the museum.