The donation of appreciated equity is a gift for you as well as the charity you hold dear to your heart. The end of the year is the perfect time to give to charity, especially if it makes a difference in your local community. Use this opportunity to get your portfolio into shape and make a charitable donation. Let’s take a quick look at the benefits of donating appreciated stock.

Realign Your Portfolio and Make the World a Better Place

The donation of appreciated securities that you have held for years makes it easier to realign your portfolio and give back to causes in a tax-efficient manner. If done properly, this donation will have a fantastic impact on the life of the recipient. The donation of appreciated stock is a gift for the recipient and also serves as a tax break for you.

Donating such stock has myriad benefits, highlighted by the option of making a large value donation that wouldn’t be possible by simply giving cash after liquidating stock. Opt to gift appreciated stock and you will sidestep capital gains tax on the amount that has appreciated that would have been incurred had the stock been sold. Furthermore, there is a tax deduction for the long-term capital gain asset’s fair market value. This tax deduction is up to 30% of the adjusted gross income. Add in the fact that this approach could potentially decrease a concentrated equity position, ultimately helping you realign your portfolio and you have all the more reason to gift appreciated stock.

Additional Benefits of Donating Appreciated Stock

Opt to donate appreciated stock and you will feel fantastic, knowing your donation will benefit the charity of your choice by the stock’s full appreciated amount. In fact, you can even take a tax deduction for the donation’s market value to boot. There is also a federal capital gains tax savings as you won’t sell the stock outright.

What About Donor Advised Funds?

You can also gift stock to donor advised funds or DAF for short. Making a donation to a charitable DAF gives you the opportunity to expand your donation in a tax-free manner. The fund serves as a financial planning tool to improve charitable giving. The charity distributes contributions to 501(c)(3) organizations as time progresses. Additional merits of DAFs are the ability to contribute money whenever desired and claim tax deductions at the time that is optimal for your unique financial plan.

The bunching approach to DAFs works particularly well. Make a sizable charitable gift in one year through a bunching of deductions equal to the aggregate donations that would have been made across several years and you can itemize in the year of the sizable donation while also taking the standard deduction in subsequent years. When in doubt, lean on your financial advisor for guidance about how to best share your wealth.

Any opinions are those of the author and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. While we are familiar with the tax provisions of the issues

presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. Donors are urged to consult their tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes.