As the end of the tax year approaches, your tax decisions are winding down. For some of us, the tax laws give us a good way to maximize charitable donations. If you hold some equities which have appreciated greatly here’s some interesting (and easy) math.
Cash Donation: Appreciated Securities:
$10,000 $10,000 (with a cost basis of $1,000, assuming 28% income tax)
Income Tax Saved:
$2,800 $2,800
Capital Gains Saved:
$0 $1,350 (Assuming 15% capital gainstax on $9,000 of appreciation)
Total Tax Savings:
$2,800 $4,150
Total Cost of $10,000 Gift
Cash Donation: Appreciated Securities:
$7,200 $5,850
The IRS stipulates that the securities are directly gifted to the charity, which then sells the assets so you yourself do not incur any capital gains. It is a win-win for everyone!