Gifts of Business Interests
As a business owner, you can accomplish your philanthropic goals through charitable planning. A gift of your corporate stock or assets can provide you with tax and income benefits and support your favorite causes and organizations through the Community Foundation of Louisville.
Benefits of gifts of business interests
- Receive a charitable income tax deduction
- Avoid tax on the sale of your business stock or assets
- Receive lifetime payments if your business stock or assets are used to fund a planned gift
How gifts of closely held stock work
- Give a percentage of your voting or non-voting shares in your business to us outright and receive an income tax deduction. We will hold your shares for a future sale or redemption and can use any dividends paid for our charitable purpose.
- Give a percentage of your voting or non-voting shares in your business for a Donor Advised Fund (DAF) and receive a charitable deduction. The DAF will hold your shares for a future sale or redemption and can use any dividends paid for charitable grants. When it works best for you, you can recommend grants from your DAF to your favorite charitable causes.
- If your corporation is an S corporation, there are special rules that apply to gifts of corporate stock. Please contact your financial and legal advisors to discuss the most tax-efficient manner to structure your stock gift. We will partner with them to determine whether the proposed gift structure can be accepted.
How gifts of business assets work
- If your business makes a gift of a non-inventory asset, it will receive a charitable income tax deduction based on the appraised fair market value of the asset.
- The income tax deduction for a gift from a business is limited to 10% of the corporation's taxable income. Your business may carry forward any unused deduction up to five years.
- If your business is an S corporation, the charitable deduction will flow through to the shareholders in proportion to their ownership interest. Check with your financial and legal advisors on the most tax-efficient way to make a gift of corporate assets from your business.
Contact us
If you have any questions about making a gift of a business interest or your business assets, please contact us. We would be happy to assist you and answer your questions.
Additional Information
Business Succession Planning and Charity - When you are ready to sell your business, before you sign a binding agreement, consider a charitable gift to reduce or completely avoid capital gains on the sale. If you give enough of an interest in your business to the Community Foundation of Louisville to establish or add to your charitable fund balance, you can use the resulting charitable income tax deduction to offset part or all of the capital gains on the interest you retain and sell.
Tax Planning Strategies for Business Owners - If you would like to sell your business and receive income, consider transferring part or all of your business stock or assets to fund a charitable remainder trust. The trust will sell your business interest tax-free and pay you (and your spouse) income for life. You will receive a charitable income tax deduction to further offset any capital gains.
