Making the Most of Your Charitable Donation: Donating Appreciated Stocks
Updated: Jan 7, 2020
If you’re thinking about impacting the lives of the clients of MSV and want to maximize your tax savings the donation of appreciated stock is a great option.
Given the changes in the rules for itemized deductions under the Tax Cuts & Jobs Act (TCJA), stock donations can reduce your taxes by giving you total deductions that exceed your new increased standard deduction amount.
Benefits of Stock Donations
With a charitable gift of appreciated securities held long-term, the donation you make and the deduction you get are greater than they would be if you were to sell the shares and donate the cash proceeds instead. That is because when you donate shares, you avoid paying the capital gains tax.
Tax Rules for Stock Donations
After you have held stock for more than one year and its price has risen, at the time of the donation you get a tax deduction equal to the fair market value of the stock (not its cost basis). If the sale of the appreciated shares would have triggered long-term capital gains, your deduction is up to 30% of your adjusted gross income (20% for family foundations), and you can carry forward higher amounts for five years. The Tax Cuts & Jobs Act increased the income limit for charitable contributions of cash to public charities (from 50% to 60%), but not for charitable contributions of stock. Shares gifted to donor-advised funds receive the same tax treatment.
Be Careful with Year-End Timing
To obtain a deduction for the current tax year, the stock transfer must be completed by December 31. For electronic transfers from your brokerage account, the donation is recorded on the day it is received (not when you approve the transfer). Plan your year-end stock gifts as early as possible and have ongoing communications with your broker and receiving charity to ensure that the transfer takes place.
Marillac St. Vincent Family Services does not provide tax or legal advice. Always contact a qualified accountant or attorney before making any financial decisions.
For more information about supporting MSV through stock donations, required minimum distributions, or your estate plans contact Daniel Summins, MSV Director of Development at (312) 278 – 4220 or dan@marillacstvincent.org.