A Win-Win in Charitable Giving
Donating long-term appreciated securities directly to charity — rather than selling the assets and donating the cash proceeds — is one of the best and easiest ways to give more.
Why donating stocks and other securities is one of the most tax-efficient ways to give
Donating Appreciated Securities: A Win-Win for Donors and Charities Alike (1)
|Donate Stock: Contribute securities directly to charity||Donate Cash: Sell securities and donate proceeds|
Current fair market value of securities
Capital gains and Medicare surtax paid(2) (23.8%)
Charitable Contribution/Charitable Deduction (3)
Value of Charitable Deduction Less Capital Gain Taxes Paid (2) (Assumes donor is in the 39.6% federal income tax bracket).
In this case, the donation of appreciated securities to a charity resulted in a greater benefit to charity and a lower cost to the donor. That’s a Win-Win.
(1) This is a hypothetical example for illustrative purposes only. State and local taxes, the federal alternative minimum-tax and limitations to itemized deductions applicable to taxpayers in higher-income brackets are not taken into account. Please consult your tax advisor regarding your specific legal and tax situation. Information herein is not legal or tax advice.
(2) Assumes all realized gains are subject to the maximum federal long-term capital gain tax rate of 20% and the Medicare surtax of 3.8%. Does not take into account state or local taxes, if any.
(3) Availability of certain federal income tax deductions may depend on whether you itemize deductions. Charitable contributions of capital gain property held for more than one year are usually deductible at fair market value. Deductions for capital gain property held for one year or less are usually limited to cost basis