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Consider Charitable Contributions of Appreciated Stock
With the rise in stock prices over the past few years, this may be an ideal time to make special contributions to your favorite charity. The organizations you contribute to (whether religious, civic, humanitarian, cultural or academic), can accomplish more with your financial assistance.
One way to boost your charitable contributions is to give shares of appreciated stock instead of cash. You deduct the shares' fair market value and avoid income tax on the capital gain. The charity then sells the shares and has money to use in their efforts. Most brokerage firms and charities are equipped to handle this conveniently.
Here is an example of how this would work. Let us assume you want to make a $10,000 contribution to your college alma mater. You also have 200 shares of XYZ stock that is currently worth $10,000 and you paid only $1000. The stock went from $5 to $50.
There are a few rules to remember:
There can be some tax consequences so it makes sense to consult your tax advisor. Consider this approach to help your favorite charity and save taxes.