A CFO owned stock in a privately-held software company in the Midwest where she began when it was a small start up. An avid supporter of local charities in her community, she was looking for a tax-efficient way to fund her charitable endeavors with the sale of this stock.
When her company announced a stock buyback program, she contacted Fidelity Charitable to see if the highly appreciated shares in her company could be contributed to the donor-advised fund, which upon review of the governing documents and paperwork related to the stock buyback, were approved.
The CFO was eligible to take a fair market value tax deduction. After the shares were contributed, Fidelity Charitable sold the shares to the company as part of the buyback program. Because Fidelity Charitable is a public charity, no capital gains were paid.
Proceeds from the sale funded the CFO's Fidelity Charitable donor-advised fund. This approach eliminated capital gains tax on the sale of the assets, allowing the CFO to give much more to charity than she would have if she sold the shares and then contributed the proceeds. She was also able to recommend multiple grants to the many charities she supports with one asset.