Donations to your favorite cause don't always have to be in cash. The California Society of CPAs (www.calcpa.org) says that whether you donate stock, mutual funds, artwork, or real estate, you may qualify for a tax break while your charity of choice reaps the full value of your donation. Before you donate to a charity, however, make sure it is qualified as a 501(c)(3) charity, or otherwise your donation will not be deductible.

Donating Stock and Mutual Funds
When you donate stock or mutual fund shares you have held for more than one year, you may deduct the full current market value of the investment on your tax return and avoid paying capital gains tax on the appreciated value.

As an example, let's suppose your portfolio holds shares of stock you bought five years ago for $2,000 that are now worth $10,000. If you donate the securities instead of selling them, you get a deduction for the stock's current market value, plus you avoid paying the 20 percent long-term capital gains on the $8,000 your initial investment has gained. And the charity receives the full $10,000 value of your donation.

To qualify for this special tax benefit, you must have held the shares for more than one year. If the shares have been held for one year or less, your charitable deduction is limited to the price you originally paid. Also keep in mind that your charitable deduction of appreciated property is limited to 30 percent of your adjusted gross income.

Here's an added advantage to donating stock or mutual fund shares. If your portfolio incurred losses, you typically would write them off against your gains, minimizing any capital gains tax. But if you give away your gains, you can still use your losses (up to $3,000 a year) to reduce your regular income. For most people, this produces a greater benefit since income tax rates are higher than the capital gains tax rate.

Source: California Society of CPAs

• Email sandeep@bitsaa.org  with the following information if you are seeking to donate stock
• Name of stock or mutual fund
• Number of shares
• Current estimated value of donation
• Name of project (BITSConnect, Seshadri Scholarship, Vamsi Scholarship, Other)
  
  
  
  
  

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