Charitable Donations of Appreciated Securities
Do you own stock, bonds, or mutual funds with long-term appreciated gains? You can make a larger charitable impact by donating those securities to a charity, rather than selling them and making a subsequent cash donation.
The example below shows the benefits . . . to both you and the charity . . . of donating your appreciated securities, as opposed to selling the securities and then donating the cash received from the sale. This tax strategy is simple, easy to implement, and very effective.
You can avoid the tax on capital gains and receive a larger tax deduction. The charity receives a larger gift because they will not pay capital gains tax upon the sale of your donated securities.
This example saves you $2,250 in taxes and the amount received by your selected charity increases by that same $2,250.
Sell securities and Donate securities
donate the cash directly to a charity
Your Investment Cost $10,000 $10,000
Current Value $25,000 $25,000
Capital Gains Tax (1) $ 2,250 $ zero
Charitable donation
AND $22,750 $25,000
Your tax deduction
(1) Assumes all realized gains are subject to a 15% federal long-term capital gains tax rate. The effective tax rate may be as high as 23.8%, and state and local taxes are not included in this example. Tax rates are as of December 31, 2023.
The Loudonville-Perrysville School Foundation, Inc. (LPSF) is recognized as a tax-exempt organization under section 501(c)(3) of the Internal Revenue Code. LPSF does not provide investment, legal, or tax advice. We recommend that you discuss topics like this with your financial, legal, and tax advisors.