HCR Wealth Advisors: Using Stocks or Cash for Your Next Charitable Contribution

There is a litany of benefits when you donate to charity. Not only are you helping to facilitate a righteous cause, but you are leveraging the tax system to your advantage. However, some might be confused if it is viable to donate with stocks or cash. There are unique advantages and factors that you need to consider with each.


Stocks or Cash for Charitable Donations

Typically, HCR Wealth Advisors recommends stocks rather than cash. You’ll be able to avoid the capital gain on the donation and still get a deduction for the fair market value of the stock.

For example, your shares of stock you bought for $14,000 over a year ago are now worth $21,000, and you now have the option to sell these stocks rather than donate it. If you do so, you would end up paying a capital gains tax on the $7000 that you just gained over the year. If you’re in the higher tax bracket, the federal tax on those $7000 can be high, with some states tacking on additional taxes.

However, if you decide to directly donate the shares, you do not have to onboard the gain. You can donate the $21,000 without paying the capital gains tax. Also, you will allow charities the leverage to sell the shares at the current market value.

Though it might be simple to simply write a check and hope for the best, you can gain tax benefits by donating stocks while also helping charities sell the shares at the current market value without onboarding capital gains tax.

About HCR Wealth Advisors

HCR Wealth Advisors is a registered investment firm that serves high net individuals. As a wealth management advisory firm, it strategically manages portfolios, helping its clients reach their financial goals, and actively protect against risks. To learn more about creating a personalized financial strategy, contact HCR.

This article is provided for informational purposes only and should not be interpreted as investment advice.