Cash vs Stock: HCR Wealth Advisors Offers A Valuable Primer for Holiday Donations

As the holiday season approaches, it is time to consider the benefits of giving back to the community. HCR Wealth Advisors has the wealth management experience that will allow clients to get the most out of their donations. When clients are unaware of the uncertainties that lie ahead, HCR Wealth Advisors helps them make sense of it all.

Let’s take a closer look at the considerations that must be made when deciding between cash and stock donations this holiday season:

Increasing Your Gift Size

Instead of selling stock to raise the necessary capital for a donation, HCR Wealth Advisors recommends consideration of donating the stock directly. This allows the donor to increase the size of their gift because they are not going to incur any sort of tax liability. A tax deduction (of full market value) is provided with the stock donation as well.

Using Cash More Wisely

Donating stock allows the donor to utilize the capital that they have on hand more wisely. Many donors will choose to donate stock from their personal portfolio before depositing the necessary cash to replace it. Those who wish to avoid future tax liability will often decide to purchase the stock at a higher cost basis, so that they can decrease potential tax expenses later.


Removal of Tax Related Liabilities

When stock is donated after it has had a chance to appreciate, this removes the tax related liabilities from the portfolio. Capital gains taxes are onerous and should be avoided if at all possible. These taxes can be imposed on both the state and federal level. Taxation rates can reach as high as 23% if the donor is not careful.

Stock Donations Are Tax Deductible

Donations of stock are tax deductible, as long as the taxpayer has taken the time to itemize their deductions. If appreciated stock is donated, the donor is going to be limited, though. Only 30 percent of the donor’s adjusted gross income can be donated in these instances.

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

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