Transferring appreciated assets directly to SABA allows you to contribute their full market value and avoid the tax on capital gains. Gifts of appreciated property, which have been held for over one year, qualify as charitable deductions up to 30% of adjusted gross income in a tax year. Amounts in excess of that limit may be carried over for five years.
Example: Dr. Smith would like to contribute to SABA. He holds appreciated publicly traded stock valued at $10,000, which he purchased five years ago for $4,000. If Dr. Smith sells the stock in order to make a contribution, he would be subject to payment of a 20% capital gains tax on $6,000, the increased value of the stock. However, if he transfers shares directly to SABA, he can avoid payment of the capital gains tax, while claiming the full fair market value of the shares as a charitable deduction. The charitable contribution will reduce his income tax obligation. Dr. Smith is now able to make a gift of $10,000 rather than a reduced gift of $8,800 since he avoided a $1,200 capital gains tax.
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