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Low Basis UPS Stock and What It Means to You

February 20, 2017
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Charitable gifts to organizations are made with the best of intentions.  But in addition to being well intended, giving to charity should also be well executed.  In certain cases, it may be in the donor’s best interest to give stock which has achieved long-term capital gains instead of cash. 

Consider the following hypothetical example:

Due to vesting of stock grants you had an additional tax bill above your withholdings of $5,000 for last year. If you are in the 39% tax bracket (33% federal, 6% state) then a $13,000 contribution of stock could have erased that burden ($13,000 x .39 = $5070). By making a gift you were able to keep $5000 out of the hands of the government and give an additional $7930 to a charity of your choice.

Additional tax benefit: And if that stock was of your most highly appreciated with a cost basis of $50 per share and currently valued at $100 you would have had a capital gain of $6500 to pay taxes on had you sold it to donate cash. Not every charity it equipped to accept stock donations but your financial advisor can help you work with the charity of your choice.

Not currently charitably inclined but want a tax-break anyway? Even if you are not charitably inclined at present, this strategy may work for you through the use of a Donor Advised Fund. DAF's can allow you to make the charitable contribution today for the tax break, but delay the decision to future years on which charity to reward. This allows you to take charitable contributions during your prime working years when your taxes are the highest, yet wait until you have the time at retirement to carefully consider your charitable inclinations. 

We are experienced with providing unique planning strategies for UPS employees and retirees to help them enjoy the achievements of their life and work.