The regulation provides an exemption that allows the public resale of restricted, unregistered, and control securities if a number of conditions are met. This includes how long the securities are held, the way in which the securities are sold, and the amount of securities that can be sold at a certain time. Please consult with appropriate tax or legal advisor on specifics. You may lose AMT preference item on contribution.

What are my options for donating…options? - Giving To Duke

Note: any short-term capital gains tax paid reduces value of gift to charity. Cheryl is a founder and senior executive of a technology company, TechCo, that recently went public. She has accumulated a significant amount of restricted stock from the vesting of RSUs that she has held for more than one year. After speaking with her financial advisor, she learns about the tax benefits of donating appreciated assets instead of cash to charity. In addition, because she donated the shares to a charity, she is not subject to any public filing requirements for company stock sales in the current year.

Bottom Line…

This hypothetical example is only for illustrative purposes. The example does not take into account any state or local taxes or the Medicare net investment income surtax. Gifts of restricted stock to charity are typically deductible, for those who itemize, at fair market value. Values may be subject to discount based on the specific restrictions if the restrictions are not cleared prior to contribution.

How Are Employee Stock Options Taxed?

In the above hypothetical case study, the restriction was cleared prior to contribution. They must make the donation of the desired amount within 30 days of the sale. Donating optioned stock cash proceeds is treated the same as if it were a donation of publicly traded securities by the Income Tax Act. The client will receive an income tax receipt for the donation.

They will also have been able to maximize the value of their donation to the charity, while minimizing their tax burden.

Robert has been with the same rapidly-growing company for over 10 years. He has achieved many promotions and received performance-based bonuses annually. These bonuses as well as part of his annual base compensation have often been in the form of employee stock options in the company. Robert would like to make some renovations to his vacation property and he is considering giving a gift to his favourite charity.

These company benefits come with taxes that could get a bit complicated.

May 17, by Community Foundations Clients who own illiquid securities such as closely-held stock, restricted stock and stock options can still use those assets to make meaningful gifts to charity. They can also generate significant tax deductions to offset income or capital gains.

Community foundations are well-suited to help with gifts of illiquid securities. Community foundations are tax-exempt charitable organizations created by and for the people of our communities throughout the United States.

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• Background.

These organizations enable people with philanthropic interests to easily and effectively support the issues they care about — immediately or through their wills. Donors can establish a charitable fund at the foundation by contributing a variety of assets and may also recommend grants — in their name, if they choose — to nonprofit groups they want to support.

Clients may consider it a mixed blessing to own an equity interest in a private business, restricted stock or stock options.

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• Gifts of Securities | Donate | SickKids Foundation!
• Gifts of Restricted Stock, Options and Closely-Held Interests!

Gifts of illiquid securities carry different tax advantages depending on the type of security and the manner in which it is gifted. The following are some of the key considerations for each of these assets.

The donation provides significant tax deductions that can be applied to the taxable gains the donor will soon realize. Even if the restricted stock is publicly traded, the gift will require a qualified appraisal that takes into account the nature and duration of the restrictions.

This can be avoided only if the transaction can be structured such that the restrictions do not apply to the amount of stock given to the charity. For those in need of income, a charitable remainder trust CRT is a good option, according to Henry.

MODERATORS

CRTs allow a large deduction upfront equal to as much as 30 percent of adjusted gross income, with excess carried ahead for up to five years. The donor collects income from the CRT for a set period of time. After the term is complete, the charity acquires the remainder value of the asset.