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Business Interests
The gift that shares your successes
You may be holding business or partnership interests
that could bring more benefit to Eckerd College than to
you. For example, you may have invested in a real-estate partnership,
or you may hold closely held stock in a family business. With any gift
of a business interest, you will need to work closely with your advisors.
Here are a few ideas about gifting such interests:
Gifts of closely-held stock
If you own shares in a closely-held business, it may
be advantageous to give some of those shares to Eckerd College.
Why? As a donor, you receive a charitable income tax deduction for the
appraised value of the shares, even if there is no market for the shares
and the original cost basis of your shares is zero. This can be a significant
tax benefit. If you need additional income, it may be possible to donate
your shares to a Charitable Gift Annuity or
a FLIP Unitrust, and receive a charitable
income tax deduction AND income for life or a term of years. If your
company is not paying dividends, this can be a nifty way to convert non-income
producing shares into income producing assets without paying capital
gains tax.
How do you donate closely-held stock? Just give a
stock certificate for the appropriate number of shares to Eckerd College.
As with gifts of marketable securities, you may need to provide a Stock
Power in a separate envelope (see Gifts of Securities for
instructions). Since there is often no market for resale of such shares, Eckerd College will
want to present the shares back to your company for repurchase or “redemption” in
exchange for cash. The company can use its retained earnings to redeem
the stock. If the company has excess retained earnings, such a stock
redemption could even help it avoid accumulated earnings tax.
Issues to watch?
You will need to:
- secure a qualified appraisal of your business
and its stock;
- check to make sure there are no restrictions
on the transfer of your stock;
- make sure you do not enter into any prior
written agreement with your company or a potential third-party regarding
the re-purchase of your stock or you could end up liable for capital
gains tax; and
- make sure the shares are not subject to
a mortgage or other debt, even if you are not personally liable, because
the debt relief you receive could be taxable. Caution: S-Corp stock
may have special considerations attached to them. Be sure to consult
your attorney.
WARNING: Consult your legal and tax advisors before
making any material decisions based on this information.
Send me a Personal Illustration!
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For more information
E-mail
us, complete the Personal Illustration
form, or call us at (727) 864-8229 so that we can assist
you.
Judi Schraer
Director of Gift Planning
Eckerd College
4200 54th Avenue South
St. Petersburg, FL 33711
(727) 864-8229
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