Donating appreciated assets

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Xan
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Donating appreciated assets

Post by Xan » Thu Oct 24, 2019 10:14 am

ochotona wrote:
Tue Oct 15, 2019 2:52 pm
And you can give your gold to charity, if you talk to the charity involved and show them how easy it is for them to cash in the physical metal at a local dealer. And even better if you have taxable ETF... just donate your appreciated shares. ZING... you've made a donation, your cap gains problem and tax went away never to be seen again. A few years ago I gave away probably ten thousand dollars of S&P-500 capital appreciation to my church. I rebought new shares with the cash I did not give to church. No waiting period. Just rebuy.
Ocho, this is of course brilliant, and really there's no reason for anybody who is sitting on appreciated assets to ever write a check for a donation. (At least one of any size.)

I'd like to start doing this myself, but ran into an unexpected snag: how to decide which appreciated asset to give away? Would it always be the one whose value is the most attributable to appreciation? I think that may be the answer. Do you have any other considerations when you do this?

For example, preferring to give away gold to avoid the potentially higher collectibles tax, or possibly giving away shares you might plan to sell one day as opposed to shares for your heirs, who would get a free step-up anyway. This gets very complicated and predicting-the-futurey very quickly.
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vnatale
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Re: Donating appreciated assets

Post by vnatale » Thu Oct 24, 2019 12:10 pm

I've been doing this forever with mutual fund shares. And, I also specifically identify those shares with the lowest cost basis which, of course, means would have had the greatest appreciation.

Vinny

Xan wrote:
Thu Oct 24, 2019 10:14 am
ochotona wrote:
Tue Oct 15, 2019 2:52 pm
And you can give your gold to charity, if you talk to the charity involved and show them how easy it is for them to cash in the physical metal at a local dealer. And even better if you have taxable ETF... just donate your appreciated shares. ZING... you've made a donation, your cap gains problem and tax went away never to be seen again. A few years ago I gave away probably ten thousand dollars of S&P-500 capital appreciation to my church. I rebought new shares with the cash I did not give to church. No waiting period. Just rebuy.
Ocho, this is of course brilliant, and really there's no reason for anybody who is sitting on appreciated assets to ever write a check for a donation. (At least one of any size.)

I'd like to start doing this myself, but ran into an unexpected snag: how to decide which appreciated asset to give away? Would it always be the one whose value is the most attributable to appreciation? I think that may be the answer. Do you have any other considerations when you do this?

For example, preferring to give away gold to avoid the potentially higher collectibles tax, or possibly giving away shares you might plan to sell one day as opposed to shares for your heirs, who would get a free step-up anyway. This gets very complicated and predicting-the-futurey very quickly.
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ochotona
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Re: Donating appreciated assets

Post by ochotona » Thu Oct 24, 2019 12:32 pm

I'm with Vinny, shed the assets that would hurt you the worst if you were forced to firesale sell everything.
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Re: Donating appreciated assets

Post by sophie » Fri Oct 25, 2019 7:30 am

Yup, I've done this too, via a donor-advised fund at Fidelity. If you itemize deductions this is pretty much a mandatory move, in place of writing a check or giving cash. Especially good as a tool to take your marginal tax bracket down a peg, if you're just over a limit.

Another nice advantage is that it separates your decision of how much to donate from who to donate to. You make the transfer near the end of the tax year, then you can make your donations anytime you want.

Good way to give money to children/relatives who file as independents for taxes and have low incomes, also. They can sell the appreciated shares for zero tax, and buy them back if they choose.
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Xan
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Re: Donating appreciated assets

Post by Xan » Fri Sep 18, 2020 11:27 am

sophie wrote:
Fri Oct 25, 2019 7:30 am
Yup, I've done this too, via a donor-advised fund at Fidelity. If you itemize deductions this is pretty much a mandatory move, in place of writing a check or giving cash. Especially good as a tool to take your marginal tax bracket down a peg, if you're just over a limit.

Another nice advantage is that it separates your decision of how much to donate from who to donate to. You make the transfer near the end of the tax year, then you can make your donations anytime you want.

Good way to give money to children/relatives who file as independents for taxes and have low incomes, also. They can sell the appreciated shares for zero tax, and buy them back if they choose.
Just wanted to follow up with a note of thanks to you, Sophie. I set up a DAF at Schwab some time ago and it works just beautifully. My cost basis goes up every month as a result of donations I would have made anyway.

I switched my taxable savings from another brokerage to Schwab just because their DAF is the best. Totally worthwhile.
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