Gifts of Closely-Held Stock Owners of “closely held” corporations sometimes have a problem whenever they try to get money out of their businesses for personal use. The IRS invariably says: “Owner, we consider that you have received a stock dividend, and we are going to tax you accordingly.’ There is a way, however, by which the owner can receive a substantial benefit from the company, not have to pay any tax, and assist Northern Illinois University with its academic programs and mission to students. Example: Jane Jackson owns 90% of ABC Corporation and decides to give NIU some shares of her stock, worth say, $10,000. The gift of stock leaves her in full control of the business and, realistically, costs her nothing personally to contribute. On the other hand, Jane is entitled to a $10,000 charitable tax deduction, which could save her $3,300 in taxes, assuming a 33% income tax bracket. The university has no reason to keep the stock shares and therefore turns them in to ABC Corporation for redemption. The corporation gives the university $10,000 for the securities and retires the stock. The university now has $10,000 for its academic programs and students The best part of this arrangement is that the IRS has ruled that Ms. Jackson will not be considered to have received a dividend - even though she has removed $10,000 from the corporation - so long as the university is not required to turn the shares of stock back to her corporation. For more information, please contact John Sentovich, Director of Gift Planning, at 815-753-1344 or e-mail sentovich@niu.edu.