Gifts of Business Interests: The Details

When the time comes to transfer or sell your business, there are tax and practical reasons for including a charity in the plan.

Gifts of business interests, such as stock in a closely held corporation, S-corporation stock, and shares in a professional corporation, can benefit you and Audubon.

You will receive a charitable income tax deduction for the full fair market value of the shares, with no capital gains liability for the transfer to us. In some cases you may be able to use the shares to fund a gift plan that pays lifetime income to you, like a charitable remainder unitrust, or that lowers the gift/estate-tax cost of passing a family business to the next generation (learn more about charitable lead trusts).

Audubon will receive dividends from the shares you donate and will apply the dividends to the purposes you designate. Alternately, we will offer the shares to the corporation for redemption or repurchase. Note that while we will be pleased to consider a redemption of the shares, there can be no prior written agreement between you and the corporation or a third party to offer us such a redemption - if there is, the IRS will impose capital gains tax on your gift transfer.

Planning points

• Since shares in a closely held business or an investment partnership don't trade publicly, you will need to secure an independent appraisal of the fair market value of the shares you donate.
• Before proceeding, make sure that there are no restrictions on the transferability of the shares, and that you have not used the shares to secure a loan from the corporation or partnership.
• Shares of an S-corporation are subject to additional IRS regulations.
• Because the offer of a business interest involves us in issues of marketability, liability, and involvement in business operations, Audubon must first review and approve any such transfer.

Please contact us so that we can assist you through every step of the process.

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