Meadows Urquhart Acree and Cook, LLP

  • Our Services
  • About Us
    • Meet Our Team
  • Our Culture
    • CPA & Accounting Careers
  • News & Resources
    • Cash Flow Resources
  • Contact Us
  • For Clients
    • Pay My Invoice
    • Send A File
    • SafeSend Returns
    • Previous Portal
    • FAQs
You are here: Home / Featured / Charitable Gifts – Stock or Cash?

08/31/2021 by Meadows Urquhart

Charitable Gifts – Stock or Cash?

Charitable Contribution Legislation

If you are planning to make a relatively substantial contribution to a charity, college, etc., you should consider donating appreciated stock from your investment portfolio instead of cash. Your tax benefits from the donation can be increased and the organization will be just as happy to receive the stock.

This tax planning tool is derived from the general rule that the deduction for a donation of property to charity is equal to the fair market value of the donated property. Where the donated property is “gain” property, the donor does not have to recognize the gain on the donated property. These rules allow for the “doubling up,” so to speak, of tax benefits: a charitable deduction, plus avoiding tax on the appreciation in value of the donated property.

Example: Tim and Tina are twins, each of whom attended Yalvard University. Each plans to donate $10,000 to the school. Each also owns $10,000 worth of stock in ABC, Inc. which he or she bought for just $2,000 several years ago.

Tim sells his stock and donates the $10,000 cash. He gets a $10,000 charitable deduction, but must report his $8,000 capital gain on the stock.

Tina donates the stock directly to the school. She gets the same $10,000 charitable deduction and avoids any tax on the capital gain. The school is just as happy to receive the stock, which it can immediately sell for its $10,000 value in any case.

Caution: While this plan works for Tina in the above example, it will not work if the stock has not been held for more than a year. It would be treated as “ordinary income property” for these purposes and the charitable deduction would be limited to the stock’s $2,000 cost.

If the property is other ordinary income property, e.g., inventory, similar limitations apply. Limitations may also apply to donations of long-term capital gain property that is tangible (not stock), and personal (not realty).

Finally, depending on the amounts involved and the rest of your tax picture for the year, taking advantage of these tax benefits may trigger alternative minimum tax concerns.

Filed Under: Featured, News & Resources

We're Hiring!
We're looking for exceptionally motivated professionals to join our fast-growing team. Apply Now!

DID YOU KNOW …

Not only does Meadows Urquhart provide accounting and tax services, but we’re also forward-thinking CPAs & consultants who take the time to step into our clients' shoes. We offer services for businesses, high-net-worth individuals, nonprofits and hedge funds.

Find out more about our services.

In Your Shoes

We're proud to be a part of this client's success story. Click on the shoes to learn more.
Health Link Family Chiropractic
Health Link Family Chiropractic


Meadows Urquhart is a CPA & accounting firm located in Richmond, VA.

Our Location

1802 Bayberry Court, Suite 102
Richmond, Virginia 23226
Phone: 804-249-5786
Fax: 804-249-5781
Contact Us

AGN International member

Follows Us

  • Email
  • Facebook
  • LinkedIn
Certified QuickBooks Pro Advisor Bill.com Expert Certified Certified QuickBooks  OnlinePro Advisor

Get Our Newsletter

Copyright © 2023 Meadows Urquhart Acree & Cook, LLP • All Rights Reserved

Home • About • Contact • Services

A Kinetic Website