Donate Appreciated Stock

If you are planning to make a substantial donation this year to a non-profit organization, consider donating appreciated stock.

Let’s say you want to donate to your favorite nonprofit and remembered you bought stock last April for $10,000. The current fair market value of that stock is $25,000. If you sell this stock today, you would pay $2,250 in capital gains tax (assuming that the rate of tax on capital gains is 15%). Your total charitable contribution would total $22,750 with a tax savings of $9,009 (assuming you fall under the 39.6% tax bracket). However, by donating this appreciated stock, you avoid paying taxes on your capital gains and your total charitable contribution will be higher. In addition, your personal income tax savings would be calculated based on the full value of your donated stock ($25,000). If you fall under the 39.6% federal income tax bracket, you would save $9,900. In conclusion, donating your appreciated stock increases your charitable deduction as well as your total contribution to a nonprofit. The table below further elaborates the benefits of donating stock:

 
Option A: Sell Stock & Donate the Cash to a Nonprofit

Option B: Donate Appreciated Stock
What You Paid for the Stock last April

$10,000
$10,000
Current Market Value of Stocks

$25,000
$25,000
Capital Gains

$15,000
$15,000
Long-Term Capital Gains Taxes (15%)1 

$2,250
$0
Amount donated to Nonprofit/Charitable Tax Deduction

$22,750
$25,000
Personal Income Tax Savings (39.6%)2

$9,009
$9,900

  • Assuming there is a 15% tax rate on capital gains.
  • Assuming that the donor falls under the 39.6% tax bracket.

Disclaimer: This is a hypothetical example for illustrative purposes only. Information provided herein is not legal or tax advice. Please consult your tax advisor about your specific and unique legal and tax situation.

While stock donations give the maximum tax benefits on capital gains, sometimes nonprofits are unable to receive and use stock donations. In this instance, you can create a Donor Advised Fund with the Asian Pacific Community Fund (APCF) who can help liquidate the securities into cash. Not only will you not pay any capital gains tax on the liquidated investment, all cash proceeds can be donated to your favorite nonprofit through APCF!

For more information on stock donations and Donor Advised Funds and other ways to give back to the community, please contact Debra Fong at dfong@apcf.org.