Question: How Do You Pay Tithe on Investment?
When it comes to investment accounts, one should return a tithe when gains are realized. In other words, they should be returned when funds are withdrawn or paid out from the account. Realizing gains happen when the investment is sold, and it can also occur when dividends are disbursed or interest on a bond is paid out in the form of a coupon payment.
To calculate the gain, one must know the cost basis or the original value of the investment. From there, you must subtract the cost basis from the value of the investment when it is sold to calculate the gain or increase in value. Often you can get this information from the investment account manager when you make the withdrawal, and the information is also made available at the end of the year on tax form 1099, which is sent to all investors.
Sometimes, calculating the cost basis can be quite difficult, especially if the investments have been held for several years and there has been a constant reinvestment of dividends. Also, from the perspective of the Internal Revenue Service, the cost basis for retirement accounts is $0 because none of the investments have been taxed yet. But if someone is returning a faithful tithe on their gross income, then they are returning a tithe even on the portion they are putting into their retirement account. So the amount they put into a retirement account may be difficult to determine. In this case, my recommendation would be to return a tithe on the entire withdrawal from a retirement account and receive an extra blessing from the Lord!
Investments always have risk, but if there is a guaranteed distribution or interest rate off an investment, then once again, a tithe should be returned when this is realized.
Written by Scot Coppock
Associate Director
GC Planned Giving and Trust Services
