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MAXIMIZING CHARITABLE CONTRIBUTIONS
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“If you’re going to give, might as well have the government pitch in too”
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Benefit Calculator: Calculate the Value of My Stock Donation
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Sample Tax Rates:Sample Stock Information:
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Marginal Federal Tax Rate:32.00%Number of Shares to Donate20
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Capital Gain Rate15.00%Current Price per Share$500.00
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Marginal State Tax Rate0.00%Price Paid per Share$200.00
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Net Investment Tax3.80%
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Option 1: Donate cash
Option 2: Sell stock, donate net proceeds (Cash - Tax Liability)
Option 3: Donate Stock
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Decrease in Cash-$10,000.00Decrease in Stock-$10,000.00Decrease in Stock-$10,000.00
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Tax Savings from Donation: $3,200.00Tax Savings from Donation: $2,839.04Tax Savings from Donation: $3,200.00
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Elimination of Future Tax Liability*$0.00Elimination of Future Tax Liability*$1,128.00Elimination of Future Tax Liability*$1,128.00
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Change in Donor's Net Worth-$6,800.00Change in Donor's Net Worth-$6,032.96Change in Donor's Net Worth-$5,672.00
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Benefit to charity:$10,000.00Benefit to charity:$8,872.00Benefit to charity:$10,000.00
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Amt of donation funded by gov't$3,200.00Amt of donation funded by gov't$2,839.04Amt of donation funded by gov't$4,328.00
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Amt of donation funded by donor
$6,800.00Amt of donation funded by donor$6,032.96Amt of donation funded by donor$5,672.00
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* All stocks that have appreciated (current value>purchase price) have a tax liability equal to the Capital Gains (Total Value - Purchase Price) times the Capital Gains Rate + Marginal State Tax Rate + Net Investment Tax Rate
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Option 3 yields the best result to the donor and keeps the benefit to the charity at a max. Now, let's consider what the donor could donate in cash while still keeping the same change in Net Worth as Option 3.
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Option 4: Donate cash, but with same net worth decrease as doing Option 3.
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Decrease in Cash-$8,341.18
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Tax Savings from Donation: $2,669.18
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Elimination of Future Tax Liability$0.00
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Change in Donor's Net Worth-$5,672.00
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Benefit to charity:$8,341.18
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Amt of donation funded by gov't$2,669.18
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Amt of donation funded by donor
$5,672.00
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Things to Remember:
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- This spreadsheet only applies to stocks held outside of a retirement account.
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- The stock must be held for 1 or more years to get the deduction for its current value.
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- Never donate stock with a loss. Sell first to gain a tax deduction on loss, then donate cash.
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- Max amount that can be donated is 30% of AGI (in order to donate it at current value)
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- Option 3 becomes increasing better for those in high income tax brackets and in instances where the stock has appreciated the most.
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