Ottawa University Planned Giving

Closely Held Stock

If you won a sizable block of stock in a closely held corporation, you may have a gift option that makes everyone happy. Suppose you decide to donate some shares (few enough that you retain 50 percent ownership) to us and then we present the stock to your corporation for redemption. Your corporation uses retained earnings for the purchase. We win because we receive much-needed funds. But you and your corporation also win.

There's one caveat: the IRS has ruled that you cannot legally bind a charitable organization to go through with the redemption at the time it receives the shares, however a charitable organization may independently offer the donated stock for redemption. It's a favorable option that benefits you and us.

Benefits

• Income tax deduction for the charitable contribution
• No capital gains tax on the appreciation in value
• No second tax on accumulated earnings by averting a dividend distribution
• You maintain control of the corporation