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October 27, 2016

 
Frazer LLP
 
 

Hi There!,

If you’re charitably inclined, making donations is probably one of your key year-end tax planning strategies. If you typically give cash, you may want to consider another option that provides not just one but two tax benefits: Donating long-term appreciated stock.

More tax savings

Appreciated publicly traded stock you’ve held more than one year is long-term capital gains property. If you donate it to a qualified charity, you can enjoy two benefits: 1) You can claim a charitable deduction equal to the stock’s fair market value, and 2) you can avoid the capital gains tax you’d pay if you sold the stock. This will be especially beneficial to taxpayers facing the 3.8% net investment income tax (NIIT) or the top 20% long-term capital gains rate this year.

Let’s say you donate $10,000 of stock that you paid $3,000 for, your ordinary-income tax rate is 39.6% and your long-term capital gains rate is 20%. If you sold the stock, you’d pay $1,400 in tax on the $7,000 gain. If you were also subject to the 3.8% NIIT, you’d pay another $266 in NIIT.

By instead donating the stock to charity, you save $5,626 in federal tax ($1,666 in capital gains tax and NIIT plus $3,960 from the $10,000 income tax deduction). If you donated $10,000 in cash, your federal tax savings would be only $3,960.

Tread carefully

Beware that donations of long-term capital gains property are subject to tighter deduction limits — 30% of your adjusted gross income for gifts to public charities, 20% for gifts to non-operating private foundations (compared to 50% and 30%, respectively, for cash donations).

Don’t donate stock that’s worth less than your basis. Instead, sell the stock so you can deduct the loss and then donate the cash proceeds to charity.

If you own appreciated stock that you’d like to sell, but you’re concerned about the tax hit, donating it to charity might be right for you. For more details on this and other strategies to achieve your charitable giving and tax-saving goals, contact us in Brea, 714.990.1040 or Visalia, 559.732.4135.


 
 
 
 
 

 

Gather your dairy management team and attend our complimentary webinar:

How Do World Markets Impact My Dairy?
Wednesday, November 16, 2016
2:00-3:00 p.m. Pacific

The volatility in the dairy industry is scary and unpredictable. It’s more important than ever for you to understand your financial position and project future revenue in order to make smart decisions. Attend this webinar and learn:

  • How to interpret your dairy’s financial statement.
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  • How to apply this information to make informed, smart choices for your dairy.

Presented by Frazer, LLP, the leading dairy accounting and consulting firm and author of the top industry source of relevant dairy statistics – Dairy Farm Operating Trends – High Ground Dairy Risk Management and Commodities Plus, you will leave this webinar with a better understanding of how world markets impact your dairy and what you can do about it.

Register Today!


Tax Guide
 
Frazer, LLP WebTaxGuide

With many valuable tax provisions made permanent by last December's PATH Act while others were extended only temporarily, tax planning is more complicated yet more important than ever. To save the most, you need to be sure you're taking advantage of every tax break you're entitled to.

This is exactly what our Tax Planning Guide is designed to help you do.

As you look through the guide please note the strategies and tax law provisions that apply to your situation or that you would like to know more about. Then contact your Frazer, LLP tax professional with any questions you may have about these or other tax matters. Or, schedule an appointment by clicking the button below.

Schedule An Appointment

 
 

Frazer LLP | 135 S. State College Blvd., Brea, CA
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