What To Know When Donating Stock

It is common for people to make charitable donations in the form of cash, check or credit card, but have you considered donating stocks?  There are a few rules to be aware of when considering stock donation and you should consult your CPA before donating, as each taxpayer’s situation is unique.


Typically, you want to donate appreciated stock with a low basis that you have held for more than one year.  When you do this, you can deduct the fair market value of the stock on the date of donation.  By donating the stock instead of selling it first, you avoid ever paying the capital gains tax on the increase in value!


Although there may be exceptions, you typically do not want to donate depreciated stock.  When you donate stock that has a lower value than when you purchased it, you still only get to deduct the current fair market value.  Furthermore, you lose the benefit of the capital loss to offset any capital gains you may have.

You should know that annual IRS limits for donation of stocks is limited to 30% of your adjusted gross income and the tax benefit of your stock donation is only realized if you itemize your deductions.

Consult your CPA if you are considering donation of stocks to make sure you reap the best tax benefits!

Honorine M. Campisi, CPA