Gifts of Business Interests
As a business owner, you have the opportunity not only to build your business and accumulate wealth for yourself and your family, but also to accomplish your philanthropic goals through charitable planning. A gift of your business interests—such as corporate stock—or business assets can provide you with tax and income benefits and help further our mission.
Benefits of gifts of business interests
- Receive a charitable income tax deduction
- Avoid tax on the sale of your business stock or assets
- Receive lifetime payments if your business stock or assets are used to fund a planned gift
How gifts of closely held business interests work
- Give a percentage of your voting or non-voting shares in your business to us outright and receive an income tax deduction. We will hold your shares for a future sale or redemption and can use any dividends paid for our charitable purpose.
- Give a percentage of your voting or non-voting shares or interests in your business to a third party a donor advised fund (DAF) and receive a charitable deduction. The DAF will hold your shares for a future sale or redemption and can use any dividends paid for charitable grants. On an annual basis, you can advise the DAF custodian on how to make grants from the fund to your favorite charitable causes.
- If your corporation is an S corporation, there are special rules that apply to gifts of corporate stock. Check with your professional advisors to discuss the most tax-efficient way to structure your stock gift.
How gifts of business assets work
- If your business makes a gift of a non-inventory asset, it will receive a charitable income tax deduction based on the appraised fair market value of the asset.
- The income tax deduction for a gift from a business is limited to 10% of the corporation's taxable income. Your business may carry forward any unused deduction up to five years.
- If your business is an S corporation, the charitable deduction will flow through to the shareholders in proportion to their ownership interest. Check with your professional advisors to discuss the most tax-efficient way to make a gift of corporate assets from your business
If you have any questions about making a gift of a business interest or your business assets, please contact us. We would be happy to assist you and answer your questions.
Business Succession Planning and Charity: When you are ready to sell your business, before you sign a binding agreement, consider a charitable gift to reduce or completely avoid capital gains on the sale. If you give enough of an interest in your business to us or a donor advised fund, you can use the resulting charitable income tax deduction to offset part or all of the capital gains on the interest you retain and sell.
Tax Planning Strategies for Business Owners: If you would like to sell your business and receive income, ask us how you can transfer part or all of your business stock or assets to fund a charitable remainder trust. The trust will sell your business interest tax-free and pay you (and your spouse) income for life. You will receive a charitable income tax deduction to further offset any capital gains.
Review of Gifts of Business Interests: Gifts of business interests may bestow significant rights and responsibilities on the receiving charity. Accordingly, we have adopted policies to carefully review gifts of business interests prior to our acceptance. Please check with us before making a gift of business interests so we can explain our gift acceptance policies.