Avoid capital gains tax on the sale of stock
Tony and Tim purchased stock in a small medical device company several years ago. The company has done well.
A company made a bid to purchase the medical device company, which required to sell their stock and pay a lot in capital gains tax. They wanted to avoid paying these taxes.
Tony: We paid $50,000 for this stock, and the value had grown to $400,000.
Tim: If we sold the stock, we would incur a capital gains tax bill of $80,000. We wanted to sell the stock to buy a vacation home.
Tony: Our CPA suggested we transfer $280,000 of the stock into a charitable remainder trust. The trust could then sell the stock tax free and give us a charitable income tax deduction.
Tim: We sold the rest of the stock for $120,000. The deduction from the gift transferred to the trust saved enough in taxes to offset the capital gains tax on the $120,000 that we received from the stock sale. As a result, we used the $120,000 to purchase our lake home and avoid capital gains tax altogether!
Tony: The charitable remainder trust gives us an income and we are enjoying our dream house on the lake. At the end of our life, the trust will transfer the remaining trust balance to the charities we have chosen.
Tim: If we sold the stock, we would incur a capital gains tax bill of $80,000. We wanted to sell the stock to buy a vacation home.
Tony: Our CPA suggested we transfer $280,000 of the stock into a charitable remainder trust. The trust could then sell the stock tax free and give us a charitable income tax deduction.
Tim: We sold the rest of the stock for $120,000. The deduction from the gift transferred to the trust saved enough in taxes to offset the capital gains tax on the $120,000 that we received from the stock sale. As a result, we used the $120,000 to purchase our lake home and avoid capital gains tax altogether!
Tony: The charitable remainder trust gives us an income and we are enjoying our dream house on the lake. At the end of our life, the trust will transfer the remaining trust balance to the charities we have chosen.
Is a sale and trust right for you?
If you own highly appreciated property, such as real estate, stocks or other securities, you could benefit from a charitable remainder trust. The trust will help you avoid capital gains tax, give you a charitable income tax deduction, and provide you with income.
If you have questions about the benefits of a charitable remainder trust, please contact us.
Click here to open a calculator and view the benefits of setting up your own charitable remainder trust..