Saturday, September 09, 2000

Savvy strategies

Giving wisely pays off in April

        Problem: It's better to give than receive — but you want to give tax-efficiently.

        Strategy: Find a highly appreciated asset in your portfolio.

        Chuck Stevens, accountant and partner in Cooney, Faulkner & Stevens, says if you give such an asset to charity, you won't pay tax on the asset's gain. Plus, you'll likely get a charitable contribution deduction for the fair market value of the asset.

        For example, say you have been a longtime shareholder of Fifth Third Bank and have a substantially appreciated position in the stock. You also wish to contribute a certain dollar amount to your favorite charity.

        You could sell the stock, give the resulting cash to the charity and come tax day, pay the 20 percent capital gains tax on the sale.

        Or you could give the stock outright to the charity. Your charitable contribution deduction is the same; however, you avoid paying the capital gains tax on the sale of the stock.

        Say you own substantially appreciated artwork and are charitably inclined. You could donate it and receive a deduction for its fair market value without incurring the 28 percent collectible capital gains tax.

        An appraisal is required if the artwork's value is more than $5,000. And the art must be used by the charity as part of its work for you to receive the full fair-market value deduction. If the charity turns around and sells the piece, you only get a deduction for your adjusted basis in the artwork.

        In order to be eligible for the fair-market value deduction, the asset must be held 12 months or longer. An appraisal is required if the value is more than $5,000, or a total value of more than $5,000 if a number of similar items are given.

        Readers: Consider Savvy strategies as general information only and seek the help of professionals because circumstances may vary.

        Planners: Share your unique strategies with the Enquirer. Send your Savvy strategies to Amy Higgins, 312 Elm St., Cincinnati OH 45202 or e-mail


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