My Twitter tax tips for this week are listed below. My twitter handle is @bluntbeancountr. Most tips have a direct link, thus, I have little commentary this week.
If you sold collectibles in 2012; coins, stamps, china, they may not be taxable if proceeds are <$1,000. http://bit.ly/Y0cc0K #blunttaxtip
If you have capital loss carryforwards, consider a flow through http://bit.ly/VLxgXs for 2013 to reduce taxes. #blunttaxtip
Did you know that safety deposit box fees are tax deductible? #blunttaxtip
Do you have unrealized capital losses & your spouse unrealized cap gains? Transfer your losses in 2013. http://bit.ly/RSGpgk
#blunttaxtip
Instead of cash #donations, consider donating public securities with capital gains. There is no tax on the gain. #blunttaxtip
Note: If you had a stock worth $1,000 with an adjusted cost base of $200 and sold the stock; at the highest marginal tax rate, you would have after-tax proceeds of approximately $815 ($1,000 less $185 tax). If you donated the $815, you would save approximately $380 in taxes from the donation assuming you had already made $200 in other donations, resulting in net tax savings of $195 ($380 less $185 tax).
However, if you donated the shares directly, the charity would receive $1,000 instead of $815 and you would save approximately $465 in taxes.
Tips for Week of February 11 - February 15, 2013
If you sold collectibles in 2012; coins, stamps, china, they may not be taxable if proceeds are <$1,000. http://bit.ly/Y0cc0K #blunttaxtip
If you have capital loss carryforwards, consider a flow through http://bit.ly/VLxgXs for 2013 to reduce taxes. #blunttaxtip
Did you know that safety deposit box fees are tax deductible? #blunttaxtip
Do you have unrealized capital losses & your spouse unrealized cap gains? Transfer your losses in 2013. http://bit.ly/RSGpgk
#blunttaxtip
Instead of cash #donations, consider donating public securities with capital gains. There is no tax on the gain. #blunttaxtip
Note: If you had a stock worth $1,000 with an adjusted cost base of $200 and sold the stock; at the highest marginal tax rate, you would have after-tax proceeds of approximately $815 ($1,000 less $185 tax). If you donated the $815, you would save approximately $380 in taxes from the donation assuming you had already made $200 in other donations, resulting in net tax savings of $195 ($380 less $185 tax).
However, if you donated the shares directly, the charity would receive $1,000 instead of $815 and you would save approximately $465 in taxes.
If I decided to donate half the amount shown in your example, what would the ACB be for the remaining shares?
ReplyDeleteOr to ask that another way, when calculating ACB, is a donation of securities treated like a regular sell?
Thanks!
Hi Erick:
DeleteYes, the trade is treated like a regular sell, however, the capital gain on the donated shares is exempt. Thus, for the 1/2 not sold, the ACB is $100.
A surprisingly large number of charities are set up to accept stock donations, too. It's also a good way to avoid having to calculate an ACB if, say, Great-Auntie did dividend reinvesting for years and didn't keep any records!
ReplyDeleteHi Bet, charities that are not set up are making big mistakes. Often these type donations are very large, at least from what I see in my practice.
DeleteInteresting point about Great Auntie, that is a huge issue and a great way to void it.