2020 CARES Act – Charitable Donations Deduction
Residents of the United States are frequently ranked as among the most generous in the world (Charities Aid Foundation World Giving Index, October 2019). Charitable contributions flowing from these taxpayers enable Sky Foundation to fulfill its mission.
To stimulate charitable giving during this pandemic, Congress included a provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide some relief for charitable organizations. The CARES Act permits eligible individuals who do not itemize deductions to deduct $300 of qualified charitable contributions as an “above-the-line” deduction, i.e., as an adjustment in determining adjusted gross income (AGI), for tax years beginning in 2020.
The amount may be relatively small, but in the throes of a health care crisis, every bit can make a difference — in this case, for both you the donor and Sky Foundation. Please consider giving before the end of the year to take advantage of this new deduction.
Charitable Donations of Appreciated Stock
Consider donating appreciated stock from your investment portfolio instead of cash. Your tax benefits from the donation can be increased and Sky Foundation will be just as happy to receive your stock.
The tax benefit to the donor is in the form of a larger deduction for the donation of the stock, using the fair market value of the stock on the date of the donation WITHOUT having to pay taxes on the value of the appreciation (capital gain). In other words, the donor does not have to recognize the gain on the donated stock as long as the donation is made out of the donor’s broker account and received directly into the foundation’s account (not converted to cash first). The stock must be held for more than a year to qualify for this preferential tax treatment.
Sky Foundation receives the fair market value of the stock which can be converted to cash and used to fund its programs and achieve its mission.
The information contained in this newsletter article is for general informational purposes. Consult your tax advisor for tax advice specific to your tax situation.
Jean M. Stenger, CPA is currently a Senior Manager at the CPA firm of Derderian, Kann, Seyferth & Salucci, P.C.
