Closely Held Business Stock

A business owner who contributes closely held stock to D-E will be allowed a charitable deduction for the fair-market value of the stock. An additional benefit is that the donor will escape the potential capital-gain tax on any appreciation in the value of the stock.

Subsequent to the gift, the corporation could purchase the stock from D-E for cash. This not only enables the donor to retain complete control over the company but also makes cash available to D-E for its current needs. As long as D-E is not obligated to sell the stock to the corporation, the transaction should produce no adverse tax results.

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