Donating Appreciated StockDonating Appreciated Stock

(Republished in part from Vegas PBS Source Magazine, October 2011)

Donating appreciated stock to charity is a sure way to generate a little tax relief for yourself.  If you do decide to donate stock, here are a few important points to consider before making your gift.

Make sure the stock has appreciated.  If the stock has fallen in value since you purchased it, you may be better off selling the stock first to generate a capital loss.  Then, if you desire, you can donate the proceeds to charity.

Select long-term stock. If you have owned the stock for more than one year before making a gift, the full fair market value of the donated shares will be tax-deductible.  If, on the other hand, you donate short-term stock (owned for less than a year), the appreciated portion of the value will not be tax-deductible.

Make sure you itemize your deductions.  If instead you take the “standard” deduction, the tax benefits discussed above may not be available.  Although, as you know, there are many non-tax reasons for you to give to charity.

Do the math first.  Receiving a charitable deduction of this sort is generally limited to 30% of your adjusted gross income.  If the stock has appreciated considerably, relative to your other income, you may not be able to deduct the entire amount in the current year.

Actual transfer is required.  Before the shares can be sold, they must first be transferred to the charity.  For assistance in making the transfer, you can ask your broker, the charity, or a member of the Vegas PBS Planned Giving Council.

Consider using a Donor Advised Fund (DAF).  If you desire to benefit several charities, and if your position in the appreciated stock is large enough, a DAF might be useful in facilitating the transfer and minimizing paperwork.  In our region, both the Nevada Community Foundation and the Henderson Community Foundation would be pleased to help you establish and administer a DAF.

Making a charitable gift usually requires the assistance of a knowledgeable advisor such as an attorney, financial planner or CPA.  We are delighted to offer the assistance of our office to those who are interested in making gifts. Schedule a free consultation with our experienced attorneys in Las Vegas.

David M. Grant