Gifts of Business Interests
How It Works
Questions and Answers
The governing documents (for example, Articles of Incorporation and Bylaws) of your closely-held company may include provisions dictating to whom you may transfer your shares. Often, but not always, charitable entities are permissible shareholders, but you want to be sure. In addition, other shareholders may be given a “right of first refusal,” which means that you won’t be able to give your shares to until all other shareholders have declined to purchase your shares. Be sure to review the governing documents for any requirements you need to meet before initiating the transfer.
Because we are a charitable entity, we must perform “due diligence” to ensure that accepting the shares won’t jeopardize our charitable status or expose to unexpected liability. We’ll need to review the company’s governing documents and talk with you and the company about any liabilities that may exist, so please discuss your plans with us well in advance of the transfer.
Be careful. If you’re already far along the process of negotiating a sale of your shares, the IRS may view your contribution of the shares to us as a “step transaction” by treating your contribution as if you had already sold the shares and contributed cash to . If the IRS recharacterizes the transaction that way, you’ll have to pay capital gains tax on the transfer. You’ll still get a tax deduction for your contribution of cash, though, and will benefit greatly from your gift. Note also that cannot accept shares that it’s required to hold or sell.
The professionals at our Department of National Planned Giving, Legacy and Endowments will be happy to discuss your interests, concerns and financial options, and work personally with you and/or your legal and financial advisors to create a plan that meets your needs and supports the Anti-Defamation League Foundation.
For more information, please contact:
Director of National Planned Giving, Legacy and Endowments
Anti-Defamation League Foundation (ADLF)
605 Third Avenue
New York, NY 10158
This information is provided for educational purposes. The Anti-Defamation League Foundation and ADL are not financial, legal or tax advisors. Please contact your advisors regarding your financial, legal or tax needs.