St. Louis recently learned of the potential merger of German pharmaceutical company, Bayer and St. Louis based agricultural company, Monsanto. The cash payout for Monsanto shareholders could be $128 per share, but if you hold these shares in your portfolio with a low basis, you could incur significant capital gains when the merger is complete.
Avoiding Capital Gains Tax
Is there a way to avoid these capital gains? The answer is yes. You could donate this low basis stock to a charity. When you donate these shares, you receive a charitable income tax deduction equal to the fair market value of the shares as long as you have held the shares for longer than a year. You will not pay any capital gains tax on these donated shares. This is great way to help out your favorite charities without incurring additional taxes.
In order to take advantage of this tax benefit, the Monsanto shares must be donated before the merger has been deemed complete. Generally the merger must be at the point of no return with no contingencies to closing to be deemed complete. You still have time, but listen closely to the news. If you wait too long to donate the shares, you will be treated as making a sale and will have to pay the capital gains tax.
Contact an Anders tax advisor to see if this make sense for you.
Our firm provides this information for general educational guidance only and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Podcasts posted by Anders CPAs + Advisors are not intended to be used and cannot be used by any individual or business, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose. Please note that some content may be generated using artificial intelligence and is intended for educational and informational purposes only. In no way does listening, reading, emailing or interacting on social media with our content establish a professional relationship.
All Insights
