Stock gifts: The year-end tax move you may be missing

PARK CITY, Utah — As year-end charitable giving deadlines approach, financial experts highlight an alternative to cash donations that could benefit both donors and recipients: appreciated stocks.

According to an article by Investopedia, donors who contribute shares directly to qualified charitable organizations can deduct the full market value while avoiding capital gains taxes. For example, an investor who purchased shares at $2,000 that are now worth $5,000 would save $600 in capital gains taxes by donating the shares directly rather than selling them first.

After receiving a major stock donation, Don Roll, co-chair of Friends of Ski Mountain Mining History, researched the tax implications. “This may be a good time to consider donating stock rather than cash,” Roll said, citing the potential tax advantages for donors.

The donation process requires informing a broker about the intended stock transfer. Local organizations like the Park City Historical Society, a 501(c)3 nonprofit, provide their brokerage account information to facilitate the transaction. Donors receive tax receipts once transfers complete.

Alternatively, donor-advised funds through firms like Fidelity and Schwab allow immediate stock donations while deferring decisions about recipient organizations, according to Investopedia.

For donors aged 70½ and older, qualified charitable distributions from IRAs present another option. These donors contact their IRA custodian to transfer up to $100,000 annually without affecting taxable income. For those 73 and older, these distributions can satisfy required minimum distribution requirements.

DISCLAIMER: This article is for informational purposes only and does not constitute financial, investment, or tax advice. Always consult qualified financial, tax, and legal professionals regarding your specific situation before making any financial decisions. The organizations and individuals quoted do not provide investment advice.