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Tax Tip: Donating Stock to Charity

Dec. 28, 2021, 9:45 AM

Charitable stock gifting offers significant advantages over cash but has largely been ignored. However, the tide is turning and charitable stock donations are on the rise.

Here are three things you need to know to give smart, have great impact, and maximize your tax savings.

  1. Do the math to see the advantage of donating stock. When you donate appreciated stock to charity, you can avoid capital gains tax while also deducting the fair market value of the donation.
  2. Select the best stocks to donate. I think of stock selection—for charitable giving purposes—from three perspectives: Where do I want or need to harvest gains? Where can I get the greatest tax savings? Where am I overly concentrated?
  3. Learn the new rules for when to donate stock. We’ve been conditioned to think about charitable giving as a year-end tax-planning activity. While this makes sense for cash gifts, you have to be more opportunistic when it comes to donating stock. The time to donate stock is when it’s had a big run and you would like to harvest gains. Donate stocks when they are running hot, regardless of the time of year.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Steve Latham is the founder and chairman of Donatestock.com. Steve is a Harvard MBA and a serial entrepreneur with three decades of experience in starting and growing innovative technology companies in finance, marketing, and data analytics.

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To contact the reporter on this story: Kelly Phillips Erb in Washington at kerb@bloombergindustry.com