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Capital Gains Tax Bypassed

Capital Gains Tax Bypassed
Ben and Michelle were nearing retirement. Over the years, with the help of their financial advisor, they made solid investments in securities and built a sizable portfolio. While their investments increased substantially in value, their potential capital gains tax bill was rising. Now with retirement on the horizon, they were looking for a way to sell their highly appreciated stock, generate income for their future and avoid paying high capital gains tax.

Ben: For many years we had supported the work of The Jewish Federations of North America (JFNA) in Israel and overseas by contributing to the Annual Campaign in our small community, part of JFNA's Network of Independent Communities. Through an e-mail, we learned that we could make a gift of our appreciated stock to charity and bypass the potential capital gains tax cost we were facing. I was thrilled to learn that after transferring our portfolio to a charitable remainder trust, the trust would sell the stock tax free.

Michelle: I liked the fact that the trust would provide us with income for our retirement years. If something happened to Ben, I would still be taken care of for the remainder of my life. When Ben and I are no longer living, JFNA will use the balance remaining in the trust to establish a Perpetual Annual Campaign Endowment (PACE) fund in our memory.

Ben and Michelle decided to make a gift of their appreciated stock to establish a charitable remainder unitrust. They were thrilled at the prospect of creating future income while bypassing capital gains tax. They named JFNA as the charitable beneficiary of the trust. When they pass away, the assets remaining in the trust will be used to establish a PACE fund in their names.

Ben: When I heard that in addition to the other benefits we would receive a charitable deduction for our gift, it was just icing on the cake! I wondered why everyone nearing retirement doesn't set up a charitable trust.

* Please note: The names and image above are representative of typical donors and may or may not be actual donors to JFNA, a Jewish Federation or a Jewish Community Foundation. Since your unitrust benefits under federal rules may be different from this couple, you may want to click here to view a color example of your benefits.

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Any tax consequences described on this page are based on U.S. federal tax law. Charitable deductions from state and local taxes or from Canadian and provincial taxes may not be available to the same extent as from U.S. federal taxes. The Jewish Federations of North America (JFNA) does not provide legal advice. Donors are encouraged to seek independent tax and legal counsel. You may read JFNA's charitable solicitation disclosure statement here and important information about endowment gifts and bequests to JFNA here.