Tax Minute


I recently spoke about charitable giving and steps you can take with your portfolio at the end of the year to reduce your tax bill. However, there is a way to combine the two that can lead to massive deductions on your tax return. If you plan to donate to a charity between now and the end of the year, and take a deduction on your income tax return in April, you should consider donating appreciated securities that you own. If you donate stocks and bonds to a recognized charity, you get to take a deduction for the fair market value of the security at the date of donation. If you were smart enough to spend a couple thousand dollars on Apple years ago when it was trading at around $7, you would have about $470,000 worth of stock today. If you were to sell this stock, you would be required to pay capital gains on it. However, were you to donate a few shares of the stock, you would get a deduction against this year's income tax that would be worth thousands of dollars and never have to pay the tax on the appreciation of the security.

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