Gifts of Business Interests
(Complete gift description)
Gifts of business interests, such as stock in a closely held corporation, S-corporation stock, and shares in a professional corporation can be beneficial for both you and MDA.
You will receive a charitable income tax deduction for the full fair market value of the shares, with no capital gains liability for the transfer to us. In some cases you may be able to use the shares to fund a gift plan that pays lifetime income to you, like a charitable
remainder unitrust, or that lowers the gift/estate-tax cost of passing a family business to the next generation (learn more about charitable
lead trusts).
MDA will receive dividends from the shares you donate. Alternately, we will offer the shares to the corporation for redemption or repurchase (if the corporation is holding retained earnings, redeeming the shares can help it avoid accumulated-earnings tax). Note that while we will welcome redemption of the shares, there can be no prior written
agreement between you and the corporation or a third party to offer us such a redemption – if there is, the IRS will impose capital gains tax on your gift transfer.
Planning points
- Since shares in a closely held business or an investment partnership don't trade publicly, you will need to secure an independent appraisal of the fair market value of the shares you donate.
- Before proceeding, make sure that there are no restrictions on the transferability of the shares, and that you have not used the shares to secure a loan from the corporation or partnership - if the loan is still outstanding, the IRS will consider your gift as relieving you of the debt and will impute taxable income to you.
- Shares of an S-corporation are subject to additional IRS regulations.
- Because the offer of a business interest involves us in issues of marketability, liability, and involvement in business operations, MDA must first review and approve any such transfer.
For more information
Email us, complete the personal illustration form, or call us at 800-223-6011 so that we can assist you through every step of the process.
|
