How is your investment portfolio doing? Do you have appreciated stock that you want to sell? Do you have plans to give to charities?
There are many ways to express your thanks through giving. The tax code provides one vehicle you may want to consider – Donor Advised Funds and the gift of appreciated stock.
Using a Donor Advised Fund, the taxpayer transfers appreciated stock to the fund. The fund then sells the appreciated shares and creates an account that the taxpayer directs. The taxpayer gets a tax deduction for the fair market value of the shares donated but does not have to pay tax on the appreciation. Under most Donor Advised Fund structures, the taxpayer can direct the fund to make donations to qualified charities, but those donations do not have to be in the year of the original share transfer.
If the taxpayer had sold the appreciated stock and then donated the proceeds, the gain could have been subject to federal and state taxes, limiting the amount available for giving.
I want to emphasize that capital gains can be complicated and I suggest you consult with your tax advisor when planning stock donations.
You are probably familiar with Donor Advised Funds and there are many to choose from. Most major investment firms have a Donor Advised Fund structure as do many community funds. Some of the local community funds include the Dayton Foundation, Columbus Foundation, Cleveland Foundation, Community Foundation of West Chester/Liberty Township, the Hamilton Community Foundation, Inc., the Greater Cincinnati Foundation, Miami County Foundation, Middletown Community Foundation, and the Greene County Community Foundation.
If you are ready to give back, consider using a Donor Advised Fund to maximize the impact of your gifts.