Time to Give It Away

Time to Give It Away

 Have you looked at the holdings in your individual or joint brokerage accounts lately? Do you see lots of gains as you look through the portfolio of your taxable accounts?  Would you like to avoid recognizing those capital gains and save on your taxes too?

 Donating appreciated stock or mutual fund shares to qualified charities is a great way to help a good cause, get your tax deduction for the full value of the shares, and avoid paying the government tax on your gains.  With the cash you didn’t use to make your donation, you could buy back the shares at an increased basis or just spend the money on other things.

 How difficult is it to donate those shares?  Just look around your online account website at brokerage houses like Fidelity or Vanguard or Schwab.  Each of those custodians has a form you fill out to list the charity, their broker, their routing number and their brokerage account number. 

 With the completed form in hand detailing the trading symbol and number of shares you wish to donate, just mail, deliver in person or fax the form to your custodian/broker and the next thing you know, your donation is on its way.

 Soon you will be receiving a thank you letter from your charity denoting the amount they received when they sold your donated shares and that’s the value of your donation.

 If you have large amounts of a stock or mutual fund and you need a large deduction this year to reduce your income tax, you might want to consider a “donor advised fund.”  All of the big brokers have them.  You donate a large amount of appreciated stock or mutual fund shares to the donor advised fund, get a major tax deduction, and only have to give away a smaller amount each year as you direct in writing.  Each time you want to make a donation, you direct the broker charity to give you for designated charity and they forward the shares or cash per your instructions.  It’s a winning combination.

Jim Ludwick
jim@adviceonly.net

Jim Ludwick is the founder of MainStreet Financial Planning. His varied education and life experiences have enabled him to apply his knowledge and experience into useful solutions for personal financial problems. His writing and broadcasting activities allow him to help many more than just individual clients. He loves a microphone.

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