Donation tax question
Assuming my brokerage account is with Fidelity and I ask them to sell an appreciated stock, which has been held longer than a year, to send the proceeds to a 501c3 as a donation, am I subject to long term capital gains tax? Or, does the stock need to be sent to the 501c3 for them to sell in order to not be subject to capital gains tax? This from a brokerage account not an IRA.
Permalink Submitted by Alan - IRA critic on Wed, 2023-11-15 23:15
No, that’s the benefit of donating appreciated shares held over 1 year. You pay no tax and get a deduction for the full value of the shares. Conversely, if you sell the shares yourself you will owe the cap gain tax and if you then donate the remaining balance net of your tax bill, your charitable donation will be limited to the amount left for a cash donation. Donate the actual shares, and the charity sells them with no tax due.
Permalink Submitted by Mike Caldwell on Thu, 2023-11-16 00:14
but can the shares be sold by my custodian and the proceeds passed on to the charity or do the shares need to be sent to the charity for them to sell.
Permalink Submitted by Alan - IRA critic on Thu, 2023-11-16 00:20
The shares need to be transferred to the charity and the charity will sell them. If your broker sells them, you will get a 1099B and be responsible for the paying cap gain tax. That would defeat the purpose of donating appreciated securities and avoiding cap gains taxes.
Permalink Submitted by Mike Caldwell on Thu, 2023-11-16 11:11
That is what I was trying to confim. Thanks.