Donating Stocks May Have More Tax Benefits

     Making a charitable gift with stocks that have grown in value may deliver more benefits to you than a gift of cash.

     While a gift of cash and a gift of stock both generate the same charitable federal income tax deduction, if you contribute stocks or mutual funds shares that you have held for a year or longer, you may also escape having to pay the capital gains tax on the appreciation in value of the donated stocks.

     Thanks to the tax benefits, contributing stocks may reduce your tax payment, putting you in a position to make a larger donation, but remember, you should not sell the stocks first because then you would be making a cash gift and would not benefit from the capital gains tax savings.

     On the other hand, if you have a stock that has lost value and you want to give it to a charity, you should sell it first and give the charity the proceeds. By doing so, you may be able to claim a federal tax deduction for the capital loss.