Alternatives Tag

Guest post by Kendra VanderMeulen, president, Seattle Christian Foundation Most of us fund our charitable giving with cash.  But, did you know that the most tax-efficient way is to use appreciated stocks?  While the last two years have been bumpy in the stock market, this year has been better and many people have significant appreciation in their portfolios.  Appreciated stock makes a great charitable gift, even if the stock is one you want to continue to hold. For example, if you want to contribute $20,000 to charity before the end of the year and you have $20,000 worth of stocks with a cost basis of $15,000, you might consider giving the stocks instead of cash.  This would result in a $20,000 tax deduction.   You could then take the $20,000 cash you had planned to give and repurchase the same stocks.  You wind up with the same portfolio position but now you have a $20,000 cost basis in the stocks instead of a $15,000 cost basis.  So you get the double tax benefit of a charitable deduction along with stepped up basis, and your favorite charities get the financial support they need.

Below is a summary of a helpful tax missive from our friends at Kovarik and Kim CPAs detailing many of the anticipated tax changes coming our way at the end of this year.  You might remember that the Bush-era tax cuts will be expiring on 12/31 if Congress doesn’t act before then.  In addition, the new Healthcare Reform legislation signed into law by President Obama will also usher in another slew of tax changes (read “increases”).  The real impact will be on the higher income and wealthier individuals. The high points in summary are as follows:
  1. When fully phased in, the top long-term capital gains rate could climb from 15% to 23.8% including applicable surtaxes, and ordinary dividends will no longer have preferential treatment.
  2. Regular marginal tax rates will increase from 35% to 39.6%.
  3. Shifting income into 2010 could be an interesting tax planning strategy to review in light of the changing future environment.

David Swensen, the brain behind the well-chronicled success of the Yale Endowment investment portfolio, pioneered an approach that pushed the boundaries of traditional portfolio management.  By adding large concentrations of illiquid assets (real estate, private equity, hedge funds) to the traditional liquid portfolio, he produced excellent results, especially during the tech...