Tax Advantages of Donating Appreciated Securities

Did you know—donating an appreciated asset directly to a charity instead of selling it and donating the proceeds can result in both tax savings for you and a higher dollar amount for the charity?

An appreciated security is an investment (shares of stock or mutual funds, for example) you’ve owned for at least one year that has increased in value since you bought it. Selling it could subject you to capital gains taxes and also lower the net amount for the charity. But by donating the stock or other assets directly you may be able to deduct the full market value of the donation, avoiding capital gains tax, and the charity could receive the full market value.

Hypothetical Illustration*
Donor’s Option Sell stock and donate proceeds Donate stock directly

*The above example is hypothetical. IYR does not provide tax advice; please consult with your financial advisor and/or tax professional about the tax implications of your donation decisions.

**Assumes 39.6% federal tax bracket

Market Value of Stock $25,000 $25,000
Capital Gains Tax** $5,000 None
Value of Donation to Charity $20,000 $25,000
Value of Income Tax Charitable Deduction $7,920 $9,900
Total Tax Savings for Donor $2,920 $9,900