A 30-second read by Nicholas Scheibner: You may have a stock in your brokerage account that has a very large gain since you originally purchased it. If you were to go and sell the stock, outside of a retirement account, you would pay taxes on the profit you made on the investment. This is called a “capital gain”.
In many cases, a stock with a very large capital-gain may be a large portion of your overall portfolio. This can provide unneeded risk in the event the stock loses significant value.
One strategy to avoid having to pay the capital-gains tax on a stock with appreciated value is to gift the stock to a charity. You can get a tax deduction for a portion of the gift, and the charity will not have to pay taxes on the stock when they sell it.
You will need to check with your charity if they are able to accept stock transfers as gifts. Also, you can look into establishing a “Donor-Advised Fund” which can help you sell appreciated stock in the account and gift the remaining money to a charity, tax-free with a deduction.
Contact Baron Financial Group to discuss tax-saving gifting strategies.
Disclosure: This material is not intended to be relied upon as a forecast, research, tax or investment advice. Please consult your financial planning and tax professional for personal advice.