Part Two of a Six-Part Series
Donating appreciated stock directly can be a tax-efficient way to support Southern Arizona. Instead of selling shares, paying capital gains tax, and donating what remains, you may be able to transfer long-term appreciated securities directly to CFSA. When the gift qualifies, more of the asset’s value can go to the causes you care about.
Example: Suppose you purchased stock for $25,000 and it is now worth $40,000. If you sold the stock first, a $15,000 gain taxed at a combined 23.8% federal long-term capital gains and Medicare surtax rate could create a $3,570 tax cost, leaving $36,430 for charity. Donating the stock directly could allow the full $40,000 to support charitable work—an additional $3,570 for community impact. If you itemize, you may also be eligible for a charitable deduction based on the stock’s fair market value, subject to applicable limits.
The takeaway: donating appreciated stock directly may put more charitable dollars to work than selling first and donating cash.
Stock gifts require coordination among your advisor, custodian, and CFSA, so start early—especially before December 31. Talk with your tax advisor to understand how this strategy applies to your situation.
Sources: IRS Publication 526, Charitable Contributions; IRS Topic 409, Capital Gains and Losses; IRS guidance on Net Investment Income Tax under Internal Revenue Code section 1411; and IRS Instructions for Form 8283, Noncash Charitable Contributions. This information does not constitute tax or legal advice. Donors should confirm holding period, valuation, substantiation, capital gains assumptions, and deduction limits with their tax advisor.
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