Donating Stock to Charity
by David Warnock
Q: I own a hot stock that has nearly doubled in value and another stock that’s been a loser. I was going to sell them both and give the cash to Heaven’s Family’s Persecuted Christians Fund, but my stockbroker (who recommended both the winner and loser stock) told me I should consider donating the stocks directly to Heaven’s Family to avoid capital gains. What do you recommend?
A: Concerning your loser stock: You should sell it and make a cash donation rather than donating the stock directly. That way you can claim the cash donation on Schedule A of your tax return. You can also offset capital gains and/or claim a net capital loss up to $3,000 on Schedule D. If your net capital loss is more than $3,000, you can carry the excess over to the next year.
Concerning your winning stock: You will want to donate that stock directly to the charity (in this case, Heaven’s Family). If you held the stock for a year or less at the time you make the donation, the allowable tax deduction is generally limited to the original cost of the stock. If you held the stock for more than one year, you can claim a charitable deduction for the full value of the stock on the transfer date. In addition to claiming the contribution on Schedule A, you must complete Form 8283, since it is a non-cash contribution. By donating the stock directly to the charity (in this case, Heaven’s Family), you wisely avoid having to claim capital gains for the amount the stock appreciated.
Concerning your stockbroker: Like so many of them, he was right half the time! Your investment in the Persecuted Christians Fund is a guaranteed winner all the time! I recommend laying up treasures in heaven.
The fine print: We are neither tax accountants nor legal representatives. Please see IRS publications 526 and 561, or a tax adviser for tax-related counsel on your specific situation.
David Warnock is happy to assist you with your questions regarding strategic stewardship. You can reach him at (412) 833-5826 or email him at DavidW [at] HeavensFamily [dot] org.