Donated stock refers to shares of fully paid capital stock that individuals or entities give to a charity or transfer to a corporation for resale. When stock is donated, it is recorded in the organization's accounts at its par value, which is the nominal value of the stock as stated in the corporate charter.
In legal practice, donated stock is often discussed in the context of charitable contributions and tax deductions. Individuals and corporations can donate stock to qualified charities, which may provide tax benefits. This practice is relevant in areas such as tax law and nonprofit law. Users may find legal templates helpful for creating donation agreements or tax documentation.
Here are a couple of examples of abatement:
Example 1: A local business owner donates shares of their company valued at $10,000 to a nonprofit organization. The organization can sell the stock to fund its programs.
Example 2: An individual donates stock worth $5,000 to a charity and claims a tax deduction for that amount on their income tax return. (hypothetical example)
| State | Key Differences |
|---|---|
| California | Specific rules on capital gains tax for stock donations. |
| New York | Additional documentation may be required for high-value donations. |
| Texas | No state income tax, affecting the tax implications of donations. |
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
| Term | Definition | Key Differences |
|---|---|---|
| Gift | A voluntary transfer of property without compensation. | Donated stock specifically refers to shares, while a gift can be any property. |
| Charitable Contribution | A donation made to a qualified charity. | Donated stock is a type of charitable contribution, but not all contributions involve stock. |
If you are considering donating stock, follow these steps:
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No, the charity must be recognized as a qualified nonprofit by the IRS.