HCR Wealth Advisors

HCR WEALTH ADVISORAt the end of the year, many people begin considering making a financial donation to their favorite charities.  With the spirit of Christmas in the air, this is a natural inclination.  In fact, Network for Good reported that 29% of the donations made on their platform are in December.  One strategy to increase the impact of a donation is to consider donating stock rather than cash.

Recent changes in the tax laws have impacted the donations of stocks to charity.  However, if the individual itemizes taxes, they are deductible.  They are limited to an appreciated stock donation valued at 30% of their adjusted gross income.  For many, this is still a viable way to support the nonprofit organizations they support. 

By donating appreciated stocks directly to a charity, the capital gains tax burden is removed.  Also, the donation is still tax deductible.  Ultimately, this means that the charity will receive a larger donation.  The donor receives the tax deduction for the fair market value of the stock.  This creates a positive situation for both the donor and the charity.

If the stock is sold and the cash donation is made to charity, the seller still has the impact of capital gains tax.  In some cases, the federal tax could be as high as 20%.  If the state also taxes, the burden will be higher.  It becomes clear that to increase the financial impact on the nonprofit organization and remove the tax liability, stock donation is a better way.

As an investment advisor, HCR Wealth Advisors works hard to develop relationships with clientele to build and manage wealth over the long term.  This allows them to identify areas of financial risk and suggest strategies for managing it.  Through their work, one primary goal is to assist clients during life’s biggest moments.  This includes periods of economic downturn.  But is also involves other transitional life moments such as divorce, marriage or retirement.  They work to support their client’s needs. 

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