Tax Tip of the Week
December 18, 2006

Donate appreciated securities

With the stock market near all-time highs, you may have shares of stock that have gained value since you bought them. Consider donating some of these shares to a qualified charity instead of giving cash. You could earn yourself one or two tax breaks.

First, if you itemize deductions you can claim a tax deduction. You can generally deduct the full market value of the shares at the time you make your donation.

And you’ll escape paying the capital gains tax that you’d owe if you sold the shares and donated cash instead. Make sure you’ve held the shares at least a year though, or your deduction will be limited to your cost basis.

Donate other property

Many of us donate used clothing and household items to thrift stores or other charities. A new rule says that you can claim a deduction only if the items are in “good” condition. Unfortunately, the new law doesn’t define what is meant by “good.”

Make sure you obtain a receipt for your donation. You’ll also need an appraisal if the item is valued at over $5,000.

Last year the IRS tightened the rules for donations of used vehicles or boats. Generally your deduction is limited to the gross proceeds the charity earns from selling the vehicle. You should receive a notice from the charity showing this amount.

Finally, remember to claim 14 cents a mile if you used your car for charitable activities.

If you need more information or assistance with this or any tax concern, give us a call.

Questions for our Financial Expert?
E-Mail us at: finance@ClevelandSeniors.Com