Capital Gains and Inversions – Opportunities for Tax-Wise Philanthropic Planning

By Michael Friedman
Senior Vice President
Philanthropic Planning & Services

As the financial markets have risen steadily since 2009 beyond pre-Great Recession highs, capital gains are increasingly on the minds of shareholders and their financial and tax advisors. Many wonder when to cash in on gains before the next market correction; others are looking to trim some winners in their portfolios and reinvest for more diversification and reduction of risk. Add to the latest trends in the financial markets the phenomenon of tax inversions – an increasingly popular maneuver among American companies seeking to merge with foreign corporations and save money by moving their tax domiciles abroad.

Why should clients and donors be concerned about inversions? With more corporations looking for creative strategies to save taxes and grow their businesses, there is growing uncertainty among shareholders and their advisors over whether these inversions might trigger capital gains, generating potential tax liability even though no cash is realized by the shareholders from the transaction. Whether you or a client is contemplating a sale of a highly appreciated asset or you are concerned that your latest investment is about to undergo a tax inversion giving possible rise to the realization of substantial capital gains, now is the time to consult with competent tax counsel on the potential tax liabilities and strategies to minimize the costs.

One way to reduce potential long term capital gains tax liability is to contribute highly appreciated marketable securities to The Associated. Get the same tax deduction as if you had given cash, but use stocks or bonds that cost you less than they are currently worth. Your deduction is based on market value, but you incur no capital gains liability on the transfer to us. It’s one of the best tax incentives left, and we can work with your advisor to make a gift of securities simple. You can thus leverage a larger donation than you could make with cash — and receive a larger tax benefit — by “buying low and giving high.”

You can maximize your tax savings in 2014 by establishing an Associated Donor-Advised Fund with appreciated assets before year-end. Best of all, you can manage your giving with an Associated Donor-Advised Fund for maximum impact to support all of the charitable causes important to you. When you create a fund at The Associated, you will have access to expert charitable planning and personalized support services together in one streamlined, efficient approach.

This year, as you plan all of your charitable giving before December 31, consider the benefits of an Associated Donor-Advised Fund. Click  to learn how you can save taxes and manage your giving wisely.

This message is for informational purposes only and should not be construed as legal, tax, or financial advice. When considering gift planning strategies, you should always consult with your legal and tax advisors.


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