Gene and Allison purchased stock in a small medical service company several years ago. The company's stock has done well since that time. A larger company is now discussing the possibility of buying the smaller company. This sale would require that Gene and Allison sell their stock, subjecting them to capital gains. Gene and Allison are looking for a way to save taxes.
Gene: We were fortunate to invest in the medical services company through a stock purchase, and we're thrilled it has performed so well. We originally paid $50,000 for the stock, and it had grown to $400,000 in value.
Allison: We talked about selling the stock, but that would have required us to pay a large tax bill. We had hoped to sell the stock to buy a vacation home. We had found a very nice summer cottage for sale on a nearby lake. The price was approximately $120,000.
Gene: We checked with our CPA; he suggested that we talk to JCF about charitable giving options we may want to consider. The gift planner told us about a sale and unitrust. We were happy to discover that with a sale and unitrust we could transfer $280,000 worth of the stock into a special trust called a charitable remainder unitrust. The unitrust could then sell the stock tax free.
Allison: Best of all, we were able to sell the rest of the stock for $120,000 cash. 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 could use the full $120,000 to purchase the lake home.
Gene: This was a wonderful arrangement. We now have income and are enjoying our dream house on the lake. It is also incredibly meaningful to us to be able to leave a legacy with JCF to benefit the South Jersey community.
Is a sale and unitrust right for you?
If you own highly appreciated property, such as real estate or stocks, you could benefit from a sale and unitrust. The trust will help you bypass capital gains, will provide you with a charitable income tax deduction in the year of the gift, and could increase your income. The sale part of this transaction could provide you with a one-time lump sum payment.
*Please note: The names and image above are representative of typical donors and may or may not be actual donors to our organization. Since your unitrust benefits may be different, you may want to click here to view an example of your benefits