Transfer Instructions for Privately Held Stock
- The donor should provide information on whether the company is a C-corp or S-corp. If the company is a S-corp, further due diligence is needed before the Foundation can receive the stock, and the donor must provide the cost basis of the stock. The Foundation is liable for Unrelated Business Income Tax (UBIT) on any realized gains from the sale of S-corp stock and on income earned during ownership of the stock.
- Generally, an appraisal is needed for non-cash gifts of $5,000 or more. However, if the non-cash gift is privately held, non-publicly traded stock, the threshold that warrants an appraisal is $10,000 or more.
- If an appraisal is needed, the donor must obtain a qualified appraisal by an independent third party to determine the value of the property at the time the gift was made. It must be prepared, signed and dated by a qualified appraiser; prepared within 60 days of the date of the contribution; and not involve a prohibited type of appraiser fee. The instructions for IRS Form 8283 set out the appraisal requirements in general. Greater detail about the required contents of the appraisal can be found in IRS Regulations Section 1.170A-13(c)(3).
- At the time of the gift, there must be no agreement or commitment between the donor or company to purchase the stock back from Virginia Tech. If such an agreement existed, Virginia Tech could be viewed as acting as agent for the donor and the donor could be liable for the capital gains.
- The donor should provide a copy of the company's most recent financial statements and a copy of any shareholders agreement or other restriction governing the transfer of the shares to other shareholders or third parties. This information is useful to determine the potential market for the donated shares, and to check against receiving shares that cannot be liquidated, if so desired. It also helps assure that any restrictions in a shareholders agreement are of a "first right of refusal" type (which should avoid capital gains to the donor) versus "mandatory sale" (which will not allow donor to avoid capital gains).
- The donor’s accountant is a good resource to obtain a referral for an appraiser, or to perform the appraisal itself.
Investments and Debt Management
Virginia Tech Foundation
902 Prices Fork Road, Suite 2400 (0455)
Blacksburg, VA 24061
Phone (540) 231-7094
Fax (540) 231-7751