Feeling Charitable

Holding onto appreciated assets for fear of triggering capital gains does no good at all. Here is some good news: If you have charitable intent, appreciated assets are great assets to donate! Qualified charities don't pay capital gains on the sale of appreciated assets.

Also, the main estate tax planning strategy for reducing estate tax for a single person, or for a person with no children, is often to make charitable donations, either during life or after death. Charitable gifts made at death reduce a person's taxable estate on a dollar for dollar basis. Such donations to qualified charities are fully tax deductible. 

Example: Mark owns 500 shares of Discovery Inc. stock that he purchased for $5/share. The stock is now worth $25/share. If Mark donated $10,000 worth of Discovery Inc. stock to the Make a Wish Foundation, he could take a charitable deduction of $10,000 in the year that he makes the gift. Assuming his tax rate is 28% and that he itemizes his deductions, that deduction saves Mark $2,800 in taxes. The Make a Wish Foundation sells the 400 shares of stock. It pays no capital gains taxes, so all $10,000 goes to the organization.