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WSJ - Gifting Private Stock via Donor-Advised Funds

7/1/2014
 

 
The Wall Street Journal
Wealth Advisor 
By Veronica Dagher 
June 17, 2014 9:06 a.m. ET
 
A client whom Adrienne Penta worked with was considering the sale of his multimillion-dollar engineering and manufacturing company, and wanted to make a $20 million donation to charity. 
 
The client, who built the New England-based business from the ground up several decades ago, liked to support education and health charities, says Ms. Penta, who oversees the trust operations and wealth-planning services for Brown Brothers Harriman Private Bank in Boston.
 
Ms. Penta suggested he donate a chunk of his private-company stock to a donor-advised fund. If he made the gift well in advance of the sale of his business, he would receive some compelling tax benefits: Not only would he get an income-tax deduction equal to the fair-market value of the donated stock, he also would avoid capital gains on the donated shares when the company is sold, she says.
 
"He's thrilled with the outcome," Ms. Penta says.
 
By giving the shares to the donor-advised fund instead of selling them and then giving the money directly to a charity, he got the full value of the $20 million deduction and saved about $5 million in taxes. And the charity got more money, too, since the donor had more money to give. More…
 
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Broward County Inspiring Philanthropy over 25 years