Closely held stock
A gift of closely held stock allows you to diversify your assets without
sending unintended signals into the marketplace. At the same time, it
lets you make a significant gift to MIT and receive a sizeable income
tax deduction.
Don’t believe the conventional wisdom: you can make
a charitable gift of closely held shares of stock in your own company,
and receive the same tax benefits as if those shares had been publicly
traded. (You must secure a qualified appraisal of stock in order to receive
this deduction.) MIT can sell the shares back to the company, either
for a lump sum or a promissory note, on the condition that there has
been no prearrangement with the company.
Questions about stock gifts to MIT can be directed to the Office of
the Recording Secretary, at 617.253.5052 or stock-gifts@mit.edu.
Or contact us.
Case study: Gifting shares of closely held stock
Victor Yung owns an Internet company in California. Yung holds all
of the 1,200 shares of stock, and he would like to use some of this stock
to make a gift to MIT. Each share is appraised at $2,000, bringing the
total value of his company to $2.4 million. Yung gives 100 shares of
stock to MIT—a gift of $200,000. (There is no prearrangement that
MIT will sell, or that the company will redeem, the donated stock.) His
company may then buy the stock from MIT at fair market value.
This gift of closely held stock has resulted in the following:
- Yung has received a $200,000 income tax deduction.
- His company has funded the repurchase of the shares that he gave
to MIT.
- MIT has received a $200,000 gift.
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