Closely Held Business Stock

A business owner who contributes closely held stock to UJA-Federation will be allowed a charitable deduction for the fair-market value of the stock. An additional benefit is that the donor will escape the potential capital-gain tax on any appreciation in the value of the stock.

Subsequent to the gift, the corporation could purchase the stock from UJA-Federation for cash. This not only enables the donor to retain complete control over the company but also makes cash available to UJA-Federation for its current needs. As long as UJA-Federation is not obligated to sell the stock to the corporation, the transaction should produce no adverse tax results.

Want to see a diagram about how gifts of closely held stock work? View the diagram of this gift

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