Closely Held Stock

If you hold stock in a closely held business, you may be able to use that stock as a powerful way to support our future.

Closely held stock is most often used to support our work in the form of:*

An outright gift. You can make a gift of closely held stock as long as the constituting documentation for the business permits additional owners and it is debt-free. The donation of closely held stock first requires you to value the interest in the business entity.

Review this checklist to see if you may benefit from donating closely held stock. Then, consult your professional legal and tax advisors to see how to maximize the benefits of this tax-efficient strategy for making a difference.

  • You are a majority shareholder in a closely held corporation.
  • You would like to remove retained earnings from the corporation, without having them taxed again.
  • You would like to maintain a controlling position in the corporation’s outstanding stock.
  • You would like to avoid capital gains taxes on the shares you donate to the University of Houston.
  • You would like to receive a federal income tax deduction for the full appraised value of the gift.
  • You would like to support our mission.

A gift in your will or living trust. If you are not ready to make a gift of these assets during your lifetime, consider making a gift of all or a portion of your closely held stock through a bequest in your will or living trust. If your estate is worth more than the current exemption amount, you will receive a federal estate tax charitable deduction for the value of your gift.

A charitable gift annuity. Funding a charitable gift annuity with closely held stock not only provides you with fixed payments for life and allows you to support our work, but it can offer numerous financial benefits. You will receive a federal income tax deduction and, if you use appreciated stock, you can eliminate capital gains tax on a portion of the gift and spread the rest of the gain over your life expectancy. It is possible to contribute stock in either a C or S corporation in exchange for a charitable gift annuity.The contributed shares must be valued by a qualified independent appraisal whenever the deduction exceeds $10,000. The appraisal is required in order to substantiate your federal income tax deduction.

A charitable trust. You may be able use your closely held stock to fund either a charitable remainder trust or a charitable lead trust. You can create a charitable remainder trust and gift all or a portion of your closely held stock to the trust. If you do this, you receive an income tax deduction for your gift, and there is no immediate capital gain on the portion gifted to the trust. The trust pays you or other named individuals payments every year for life or a term of years. When the trust terminates, the remaining principal goes to the University of Houston as a lump sum. Although a charitable remainder trust with a flip triggering event works well with most business interests, this type of trust cannot be the owner of S Corporation stock.

In certain situations, you can create a charitable lead trust, which allows you to pass your closely held stock to your heirs after supporting the University of Houston now. The trust makes annual gifts to our organization for a period of time. After the trust terminates, the closely held stock passes to your heirs.

* A gift of closely held stock requires special handling, so you should always consult with your legal or tax advisor first.

Next Steps

  1. Contact Office of Gift Planning at 713-743-8680 or giftplanning@uh.edu for additional information on giving a gift of closely held stock.
  2. Seek the advice of your financial or legal advisor.
  3. If you include UH in your plans, please use our legal name and federal tax ID.

Legal Name: University of Houston
Address: 4800 Calhoun Road, Houston, TX 77004
Federal Tax ID Number: 74-6001399