Business Interests

The gift that shares your successes

You may be holding business or partnership interests that could bring more benefit to Oxford University than to you. For example, you may have invested in a real-estate partnership, or you may hold closely held stock in a family business. With any gift of a business interest, you will need to work closely with your advisors. Here are a few ideas about gifting such interests:

Gifts of closely-held stock

If you own shares in a closely-held business, it may be advantageous to give some of those shares to Oxford University. Why? As a donor, you receive a charitable income tax deduction for the appraised value of the shares, even if there is no market for the shares and the original cost basis of your shares is zero. This can be a significant tax benefit. If you need additional income, it may be possible to donate your shares to a Charitable Gift Annuity or a FLIP Unitrust, and receive a charitable income tax deduction AND income for life or a term of years. If your company is not paying dividends, this can be a nifty way to convert non-income producing shares into income producing assets without paying capital gains tax.

How do you donate closely-held stock? Just give a stock certificate for the appropriate number of shares to Oxford University. As with gifts of marketable securities, you may need to provide a Stock Power in a separate envelope (see Gifts of Securities for instructions). Since there is often no market for resale of such shares, Oxford University will want to present the shares back to your company for repurchase or “redemption” in exchange for cash. The company can use its retained earnings to redeem the stock. If the company has excess retained earnings, such a stock redemption could even help it avoid accumulated earnings tax.

Issues to watch?

You will need to:

  1. secure a qualified appraisal of your business and its stock;
  2. check to make sure there are no restrictions on the transfer of your stock;
  3. make sure you do not enter into any prior written agreement with your company or a potential third-party regarding the re-purchase of your stock or you could end up liable for capital gains tax; and
  4. make sure the shares are not subject to a mortgage or other debt, even if you are not personally liable, because the debt relief you receive could be taxable. Caution: S-Corp stock may have special considerations attached to them. Be sure to consult your attorney.

WARNING: Consult your legal and tax advisors before making any material decisions based on this information.

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For more information

E-mail us, complete the Personal Illustration form, or call us at 212 377 4900 so that we can assist you.