Reduce the Pain of a Taxable Event
Submitted by American Endowment Foundation on December 10th, 2015
By Eric Kinaitis
The recent announcement that Keurig Green Mountain, the maker of the popular series of coffee brewing systems and their related accessories and supplies, was being acquired by JAB Holding, a privately held investment group, would initially be a source of excitement. What shareholder wouldn’t enjoy their per-share value to increase 78% on such news?
However, due to the fact that publicly traded Keurig will now become a privately owned company once the buyout completes, shareholders of Keurig will be faced with a taxable event that may be occurring against their will. Similar to what is seen with capital gains payouts from mutual funds, the gain in share value that a stock holder would normally enjoy is tempered by the fact that the increase in value is treated as a capital gain … even though the shareholder did not actually “sell” their shares.
One way to lessen the burden of the impending capital gains tax is to gift the appreciated shares to a charitable cause. The use of a donor advised fund (DAF) can allow the affected shareholders to gift their shares into their own donor advised fund.
This benefits donors in the following ways:
- They receive a deduction for the fair market value of the contributed shares (highest available).
- They avoid capital gains tax on the original shares.
- They determine charitable beneficiaries on their own timetable. They can also engage their family in building a charitable legacy over successive generations.
- They can recommend their financial advisor/planner to manage their investments in their DAF on their familiar platform.
For this process to function in a way that gives the donor the maximum charitable benefits, the gifting of these appreciated shares would need to occur prior to the shareholder vote of approval. It is important that the donor make themselves aware of that deadline and plan accordingly. Qualified tax advice is recommended.
Do you have clients with holdings in Keurig shares? Call us and let’s discuss if a donor advised fund at American Endowment Foundation can be the right tool in lessening a capital gains tax impact. Contact us or call at 1-888-660-4508.
Note: The information provided herein is for informational purposes only and should not be interpreted to constitute legal and/or tax advice. Donors should consult their legal and tax advisors regarding their specific situations.