Sweet Charity

Look to your portfolio for your year-end charitable gifts. Instead of cash, give away appreciated securities. As long as you’ve held those securities for over a year, you can get a writeoff for the full price without having to pay capital gains tax.

Suppose you bought a stock for $1,000 many years ago; that stock has now appreciated to $3,000. In reality, this “$3,000 asset” is worth only $2,600 to you because you’d pay a 20 percent rate on the $2,000 gain, if you wanted to cash in.

Further suppose you intend to make a $3,000 charitable gift at year-end. Rather than cash, give away the appreciated shares. You’ll get the same $3,000 tax deduction you would have received with a cash donation, the charity can sell the shares and realize $3,000, and no one ever pays the tax on the deferred gains.

To implement the transaction:

• Call the charity and get its brokerage account number.
• Then call your own broker or your mutual fund company and explain what you want to do, providing the account number.
• Follow up by fax or phone to confirm the transaction.