Executives with concentrated and restricted positions in public company stock may think about donating shares to help protect against tax exposure in their portfolios. If the executive is subject to Rule 144 public sale restrictions, and/or is considered a “control person” in the company, the company’s general counsel must give permission to transfer and later sell the shares at acceptable times.

Contributions of restricted stock to a charity or donor-advised fund account are generally deductible at fair market value on the date of contribution, but may be subject to discount based on the specific restrictions. If donated to a private foundation, contributions of restricted stock are generally deductible at the lower of cost basis or market value. A qualified appraisal is generally required to substantiate fair market value.

Real Estate

According to the U.S. Federal Reserve’s 2013 Survey of Consumer Finances, more than 40 percent of Americans with the highest net worth own residential property other than their primary home. More than a third have interests in commercial property. It can make sense to donate real estate that meets the following criteria:

•       The property has been held for more than a year and has appreciated significantly.

•       The property is generally debt-free, marketable and relatively easy and cost-effective to liquidate.

•       The owner is willing to transfer the property irrevocably to the donor-advised fund, which will negotiate the sale price and control the sale, often using an experienced intermediary.

These criteria most often apply to donations of a primary or secondary home or other residential property held for some time. While commercial real estate may also be donated under certain circumstances, the donation may involve legal complications if tenant or lease issues are involved.

Contributions of real estate to a charity or donor-advised fund account avoid capital gains tax on the sale and are generally deductible at fair market value—as determined by an independent qualified appraiser—on the date of contribution. Contributions of real estate to a private foundation are generally deductible at the lower of cost basis or market value.

Privately Held Stock (C-Corp And S-Corp)