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More Bang for your Charitable Buck

Posted: June 19, 2018

Giving to a favorite charity can be a very rewarding personal experience.  Typically, charitable donations are done with cash.  However, in many cases it is better to make donations with appreciated securities. 

As you likely know, if you sell stock that has grown in value and give the sale proceeds to charity, the gain you realize at the time of the sale is subject to capital gain taxes.  What you may not know, is the Internal Revenue Code allows you to deduct the fair market value of qualified stock that is given directly to public charities if you itemize your deductions and if you have held the stock for over one year prior to the donation.  As a result, if the stock you are donating has appreciated in value while you owned it, you get a tax deduction for the built-in gain without having to pay capital gain taxes.  This allows you to save on taxes, and if you’d like, to pass those savings on to the charity as well.

In recent years it has become considerably easier to donate stocks, rather than cash, to charity.  Most brokerage firms (including Fidelity, Schwab and Vanguard, to name a few) have programs that allow account owners to transfer securities from their accounts to charity. 

Happy Giving!

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