DONATION OF
PUBLICLY TRADED SECURITIES

Ms. Rodriguez holds a number of shares that have increased considerably in value over the years. She would like to make a large donation to the MMFA while minimizing the tax burden on her assets. She has decided to donate her shares directly to the MMFA Foundation.

Selected Option: Direct donation of publicly traded securities (shares)

Ms. Rodriguez holds a number of shares that she purchased at a cost of $2,000 and that are now worth $10,000 (fair market value). Instead of selling them (and being taxed on capital gains), she has decided to donate them directly to the MMFA Foundation.

Donation to the MMFA: The Museum receives a donation of $10,000, corresponding to the market value of Ms. Rodriguez’s shares.

• Tax benefit related to the capital gains: Had Ms. Rodriguez sold her shares, she would have realized a capital gain of $8,000 ($10,000 - $8,000). As only 50% of the gain is exposed to tax, the taxable gain would have been $4,000. The taxes owed would therefore be $2,000. Donating these shares directly to the MMFA, completely avoids this tax.
  
  

• Tax benefit related to the donation:
  In addition, Ms. Rodriguez would receive a tax receipt for her $10,000 donation, entitling her to an approximate tax credit of $5,000.*

• Combined tax benefit:
  $2,000 tax savings on the capital gain + $5,000 tax credit for the donation = $ 7,000 total tax savings.

Summary:
By donating her shares worth $10,000 to the MMFA, Ms. Rodriguez incurred a net cost of only $3,000 after tax. Her donation allowed her to make a significant contribution to the Museum, which received the entire donation ($10,000) and recognized her for her generosity.

* The example is based on a 50% tax rate to simplify the calculation.