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Donating Investments

By , November 13th, 2017 | No Comments

donating investments
The season of giving is upon us. Stores will start playing Christmas music, friends and families will come together, and gifts will be exchanged. During this time of year, donations ramp up. According to an article written by USA Today, 34% of annual giving is done in the last three months of the year. This clearly shows how much good cheer can be spread during this time of year.

Though donations of any kind are appreciated, the gift of appreciated assets benefits both the giver and the receiver. Here are some tips when donating appreciated assets this season.

  1. Tax-deductible donations – Donating investments, like stocks and bonds, that have appreciated will give you tax deductions. This is only applicable if you itemize your deductions. If you bought 100 shares of XYZ two years ago at $20 and today it’s worth $40, you can donate all 100 shares to the charity of your choosing. You’re now eligible to deduct $4,000 as a charitable gift.
  2. Donating cash has fewer advantages – Giving appreciated stock is far better than giving cash. Instead of donating the 100 shares of XYZ from the above example, you sold your investment at a 100% gain and donated the $4,000 as cash. Though you’ll still be able to deduct the $4,000 from your taxes, you now have to pay capital gains tax on your $2,000 gain. You avoid capital gains taxes if you donate the shares directly.
  3. Make sure you hold the investment for at least one year – If you held an investment for less than one year, the deduction would be treated differently. For example, you bought 100 shares of ABC at $10 per share. 6 months later, you decide to donate those 100 shares. At the time of donation, ABC is now $15 per share.  Your donation is worth $1,500. However, you held the stock for less than one year so your deduction is limited to your cost basis. That means you are only allowed to deduct the $500 difference between the price you bought ABC and the price it was when you donated it.
  4. Donor-Advised Fund – If you are unsure of where you would like to donate your appreciated asset(s), you can instead give to a donor-advised fund. This type of fund has two advantages. One, you are still able to deduct the donated amount. Two, if you are undecided on where you want to donate your appreciated asset(s), you can use the donor-advised fund as a holding vehicle until you decide.


As I said, the season of giving is right around the corner. This time of year, there is an influx of charitable donations, which helps spread good cheer to many different places. Though you should not need an incentive to donate to the less fortunate, gifting appreciated assets is beneficial to both parties. Please, do your part this holiday season and donate to a charity. There are number charities listed in my previous article, which you can find here.

Photo: Nazir Amin

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