When it is time to transfer business ownership, whether to create income for retirement or to pass on an inheritance, business owners have special opportunities to give something back to their hometown.
Giving a gift of closely held stock is an opportunity for an individual to help their hometown with a gift of the corporation’s stock. Transferring shares of the corporation’s stock to the Nebraska Community Foundation for the benefit of the Wayne Area Legacy Fund provides many benefits to the giver.
There is the satisfaction of making a gift today that can be invested in your hometown. There is also an immediate personal charitable income tax deduction and bypassing of capital gains taxes on the gift of stock. Additionally, this avoids declaration and double-taxation of dividends and allows the corporation to buy back the stock. This method of giving also reduces estate taxes and settlement costs.
A business owner who owns the majority of stock in a family business or corporation transfers shares of his or her stock to the Nebraska Community Foundation. The Nebraska Community Foundation then sells the donated stock for fair market value. The gift of stock leaves the business owner in full control of the corporation without any personal costs. As a result of this gift, the business owner becomes entitled to a charitable deduction for the full fair market value of the stock on his or her personal tax return. Plus, he or she avoids the capital gains tax on the appreciation of the corporation’s stock.
There are a few things to keep in mind when considering a gift of closely held stock.
If the gift value exceeds $10,000 the charitable gift deduction amount must be determined by a qualified appraisal of the stock. There can be no prearranged obligation for the Nebraska Community Foundation to sell the stock back to the corporation. Corporate repurchase should occur two weeks to two months after the gist is made. Lastly, the corporation’s liquidity is needed to repurchase the stock.
A few variations of this plan of gift include the gifting of stock to a charitable remainder annuity trust to receive a lifetime income, making a gift of stock prior to selling the company to receive a personal tax deduction and avoid capital gains taxes and using a combination of the above variations to transfer your corporation to your heirs.
Individuals can visit Nebraska Community Foundation’s Gift Planning website – www.ncfgift.org – to begin the process of donating. You can also find details on the benefits and process of making a charitable gift for other out-of-the-box giving methods beyond cash. Nebraska Community Foundation is also always available to point you in the right direction at (402) 323-7330 or info@nebcommfound.org.
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Nebraska Community Foundation unleashes abundant local assets, inspires charitable giving and connects ambitious people to build stronger communities and a Greater Nebraska.
Headquartered in Lincoln, the Foundation serves communities, donors and organizations by providing financial management, strategic development, education and training to a statewide network of 1,500 volunteers serving over 270 communities.
In the last five years, 45,915 contributions have been made to NCF and its affiliated funds. Since 1994, NCF has reinvested $423 million in Nebraska’s people and places. For information, visit NebraskaHometown.org.
The Wayne Area Legacy Foundation harnesses the power of giving to make the Wayne area "a great place for all ages to live, work and play for generations to come."
Foundation members invite you to be a part of the legacy of promoting progress in our area by giving to the unrestricted endowment. Similar to a community savings account, unrestricted endowments are an important tool to keep hometowns across Nebraska growing, thriving and improving future generations. A portion of the income earned by the endowment is granted annually to fund projects and programs to benefit the community, the principal remains intact and grows every year.
The Wayne Area Legacy Fund (WALF) has invested over $50,000 back into the Wayne Area community since the inception of the fund. The WALF is an affiliated fund of the Nebraska Community Foundation (NCF), a 501(c)(3) charitable organization. All contributions to WALF are tax-deductible.
Visit WayneAreaLegacyFund.org, email WayneAreaLegacyFund@gmail.com, or call 402-375-2240 for additional information.
