Can I Receive a Charitable Income Tax Deduction for Giving Securities?
Yes, you can receive a charitable income tax deduction for the value of securities that you donate to charity. The deduction is equal to the fair market value of the securities on the date of the gift.
Here’s a hypothetical example of how this could work:
Jane Anderson bought $3000 of stock in Acme Food Company. Six years later, the stock is worth $8000. She would like to make a gift to her church’s Foundation. She could sell the stock, which would net her $7250 in a 15% capital gains tax bracket. She could then give this money to her church and be entitled to an income tax deduction of $7250.
If Jane had given her church’s Foundation the stock instead of the cash, the result would have been more favorable. The Foundation could have sold the stock for $8000, and would not have had to pay any capital gains tax. Plus, Jane would have received a charitable income tax deduction of $8000 (the full, fair market value of the stock), even though the total cost of her gift would have been only $3000 (her original cost basis).
