Taxes often seem complicated, but sometimes the solution is simpler than people realize. That’s why Sue* asked for our help. She was an executive at an international accounting firm who had amassed a large amount of low-basis, highly appreciated stock that was publicly tradable. However, if she ever wanted to liquidate, she could potentially owe a significant amount of taxes on the difference between the value at purchase (cost basis) and the current appreciated value.
She was looking for ways to: reduce spending, increase savings, and slowly lower her exposure to the large stock position in her employer’s stock without incurring significant taxes.
How We Helped
As we analyzed Sue’s financial situation in more detail, we learned that she’d pledged to contribute $10,000 per year over four years to a private school’s building fund. After looking at her entire financial picture, we concluded that donating her highly appreciated stock to the private school would accomplish all three of her objectives.
With Sue’s blessing, we contacted the school, coordinated the paperwork, and donated some of her stock to the school, which was a 5cl(c)(3) tax-exempt organization. This transfer enabled Sue to:
- fulfill her pledge to the school.
- decrease her exposure to the stock in her portfolio.
- claim a full deduction for the current market value of her stock.
- prevent paying tax on the accumulated gain in the stock.
Don’t let company stock or the associated taxes consume you. Our team deals with these matters often and can suggest a solution that will help you accomplish your goals.
* fictional name, but actual client
