Closely held stock is shares in a Corporation in which the majority of stock is held by a few shareholders. A gift of closely held stock can be a powerful way to contribute to our future while realizing valuable tax benefits.
Say you decide to give some of your shares of closely held stock to us (not so much as to reduce your ownership to 50 percent or less). Because there is no market to resell these shares, we may present the stock to your corporation for redemption, which could be paid for with your company’s retained earnings. This gift provides us with much-needed funds once we can liquidate your stock and gives you an income tax deduction in an amount equal to the fair market value of your stock.
Some things to keep in mind with this charitable giving option though - The Internal Revenue Service has ruled that you cannot legally bind a charitable organization to go through the redemption at the time it receives the shares. There can be no prearranged contract or agreement for the corporation to buy the stock. But the IRS accepts a tax court holding that a charitable organization may independently offer the donated stock for redemption.
Profile of a Giver of This Gift
- You are a majority shareholder in a closely held corporation.
- You would like to remove retained earnings from the corporation, without having them taxed again.
- You would like to support our work’s mission.
- You would like to maintain a controlling position in the corporation’s outstanding stock.
Is This Gift Right for You?
We encourage you to consult your professional legal and tax advisors to see how to maximize the benefits of this tax-efficient strategy for making a difference at the Anne Carlsen Center.
Benefits of This Gift
- Neither you or the Anne Carlsen Center will owe capital gains taxes on the shares you donate to charity.
- You qualify for an income tax deduction for the full appraised value of the stock.
- You maintain control of the corporation.
How to Make This Gift
1. Let the Anne Carlsen Center know of your intentions – Be sure there are no restrictions on the transfer of your stock, and it is debt-free. Once we know your plans for making a gift of closely held stock, we can evaluate it to ensure that we can accept the stock according to our guidelines.
2. Determine how you would like the Anne Carlsen Center to use your gift of closely held stock – Do you have a particular program in mind that you would like to fund with your gift? Or will your gift be unrestricted, enabling us to use the proceeds for our most crucial needs? If you choose to specify the purpose for your gift, please let us know so we can ensure that your intentions can be fulfilled at the time of your gift.
3. Meet with your professional advisor – Discuss your possible tax and financial benefits with your professional advisors to ensure that this gift meets your goals. If the value of your shares is greater than $10,000, you will also need to arrange for a qualified appraisal to document your charitable income tax deduction.
4. Meet with us to finalize your gift - During this meeting, we will discuss the three steps above and complete any necessary paperwork, including endorsing the stock certificates to us.
For More Information
We understand these gifts are complicated, that’s why we would be happy to work with you and your advisors to discuss a potential gift that meets your financial goals while also supporting our mission. You are not alone in making these life-impacting decisions. Please contact the Anne Carlsen Center Foundation at 1-800-568-5175 to help you answer any questions you may have or to futher discuss your giving options.
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The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.