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Donate an Appreciated Asset Instead of Cash and Increase Your Retirement Contribution
If you are considering giving a cash gift from your income, you should consider giving the gift of an appreciated asset such as land, stocks, or collectibles (anything of substantial value that can be sold). This approach can provide you a way to make a significant contribution to the VFW National Home for Children and provide retirement income for your future.
Example:
Robert wants to give a $3,000 gift to the National Home out of his income. He also owns stock that is worth $3,000 and has a cost basis of $1,000. Instead of giving the $3,000 cash gift he:
- Gives the National Home $3,000 worth of stock. The National Home sells the stock for $3,000 and benefits from the entire donation. Robert then becomes eligible for an income tax deduction of $3,000 which saves him $840 (assuming he is in the 28% tax bracket) and he is able to avoid a 20% capital gains tax of $400 on the sale of the stock;
- He then contributes $3,000 of income to his 401(k), which replaces the appreciated stock in his taxable portfolio account. By doing this he lowers his taxable income by $3,000, which gives him an additional tax savings of $840. Robert’s gift of $3,000 ends up having a net cost of just $1,320 after taxes;
- If he wants to use all of the $3,000, he has the option of investing the remaining $1,680 in a Roth IRA (if eligible) to provide future tax-free income.
Robert is able to make a generous contribution to the National Home and double his tax benefit while investing in his own retirement.
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