The Tax Implication of Donating Stock Held in an IRA to a Church

by Alexis Lawrence

If you own a variety of financial investments, such as stocks, for the main purpose of investing for retirement, you may find it simpler to combine all of these holdings into your individual retirement account (IRA). Stocks held in an IRA are still subject to the fluctuations of the market and, like other IRA earnings, can be donated to charities, such as churches.

Holding Stock in an IRA

If you hold stock in an IRA, it is subject to the same basic rules as the IRA. Like the contributions that you make to the IRA and earnings on those contributions, you don’t have to pay taxes on any financial gains derived from stocks held in the IRA. However, since the earnings on IRA-held stocks aren’t taxed, you can’t claim any losses on the stock on your tax return.

Donating Stock

You can donate the stock held within an IRA to a church. Before do so, however, you should consult with the church’s financial advisers to make sure that the church has the means to handle to this type of donation. Some religious organizations may only be set up to accept cash donations.

Tax Implications

If you donate stock to a charitable organization, you won’t pay taxes on earnings made on the stock. Since churches are tax-exempt organizations, the church to which you give the stock won’t be taxed on the stock earnings either. However, the donation does factor into your income tax. As long as you owned the stock for more than a year, you can claim the full value of the stock as a charitable donation. If you owned the stock less than a year, you can claim only the price you paid for the stock.

Reporting the Donation

When you want to deduct a stock donation made to a church from your personal IRA as a charitable donation, you must fill out an additional form with your tax return. Form 8283 provides a means of itemizing all non-cash charitable contributions. The form is required for all non-cash charitable contributions that exceed $500 in a given tax year, including stock donated from an IRA.

About the Author

Alexis Lawrence is a freelance writer, filmmaker and photographer with extensive experience in digital video, book publishing and graphic design. An avid traveler, Lawrence has visited at least 10 cities on each inhabitable continent. She has attended several universities and holds a Bachelor of Science in English.

Photo Credits

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