Making Charitable Donations Of Stock Instead Of Cash After Tax Reform

If you’re charitably inclined and hold meaningful amounts of appreciated stock, such as shares acquired from a stock option exercise, restricted stock/RSU vesting, or ESPP purchase, donating stock instead of cash can be a smart tax-planning move. Given the changes in the rules for itemized deductions under the Tax Cuts & Jobs Act (TCJA), stock donations can reduce your taxes by giving you total deductions that exceed your new increased standard deduction amount. Tax Rules For Stock Donations After you have held stock for more than one year and its price has risen, at the time of the donation you get a tax deduction equal to the fair market value of the stock (not its cost basis). If the sale of the appreciated shares would have triggered long-term capital gains, your deduction is up to 30% of your adjusted gross income (20% for family foundations), and you can carry forward higher amounts for five years. The Tax Cuts & Jobs Act increased the income limit for charitable contributions of cash to public charities (from 50% to 60%), but not for charitable contributions of stock. Shares gifted to donor-advised funds receive the same tax treatment. After Tax Reform: Using Company Stock To Bunch Donations. The advice from many experts is to bunch donations so that your itemized deductions go beyond the TCJA standard deduction amounts in 2018 of $12,000 for individuals and $24,000 for joint filers (adjusted annually for inflation). If you do not routinely exceed the standard deduction, you can get over it by bunching donations of stock to charities or a donor-advised fund.