Let's say I make a charitable donation of $10,000 worth of stock at current value. I paid $4,000 for it. Do I get a $10,000 or $4,000 deduction? If $10,000, do I have to pay tax on the $6,000 gain?
If it is $10,000 and no capital gains (as I have always heard...) is it a clean thing, or is there a chance something will come back to bit me?
So long as you transfer the stock directly to the charity, you get to deduct $10K, no capital gains. (Do not sell it and then give them the proceeds, since you pay capital gains that way.) It's one of the rare loopholes that's available to normal people. People do this all the time, it's not considered exotic.
If it's a listed stock, you compute FMV as the average of the high and low prices on the day you donated it.
R's, John
I believe this applies to long term held stock, so the extra savings is
15% tops, not short term at std marginal rate. In the right scenario, it pays to donate a larger amount to a charitable trust such as Schwab or Fidelity have, and then send it to the end charities year by year. It's a gift for tax purposes when you send it to the trust. Joe
True, it must be held more than one year.
And by getting it out of AGI, you eliminate all those bad tax events affected by high AGI.
Also when gifting appreciated stock to a 50% organization, your charitable contribution is limited to 30% of AGI, with some carry forward available.
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