Donating Stock (Appreciated Non-Qualified Asset Transfer)

Appreciated Stock is a Simples Strategy to Give More and Be Taxed Less

For individuals that have taxable brokerage assets with high long-term capital gains, you can make a bigger impact with your giving by donating your securities directly to charity.

By donating the asset rather than selling the asset and contributing the after-tax proceeds, you may be able to increase the amount of your gift and your tax deduction. When you donate the asset to charity, you have the ability to receive a deduction for the fair market value (up to 30% of adjusted gross income) of the asset and avoid the capital gains that would be produced if the assets were sold for cash instead. Donating the appreciated. Once donated to the non-profit, the organization can liquidate the asset tax-free and put that cash to use within the organization. For gifts bigger than 30% of the donors adjusted gross income, the IRS will allow a 5-year carry forward of any excess deduction.

How It Works

Jimmy Smith bought 100 shares Coca-Cola stock in 1990 for $4.74 per share ($474 total).  The stock is now worth $53 per share ($5300 total).  If Jimmy were to sell the stock, he would owe capital gains on his earnings, leaving him $4,827 to donate.  Jimmy decided to donate the Coca-Cola shares directly to the charity. Jimmy was able to deduct the $5,300 on his taxes, the charity received $5,300 rather than the $4,827 Jimmy would have had available if he sold the stock, and Jimmy avoided paying capital gains on the stock.  A win-win for everyone.

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