Guest post by Kendra VanderMeulen, president, Seattle Christian Foundation
Most of us fund our charitable giving with cash. But, did you know that the most tax-efficient way is to use appreciated stocks? While the last two years have been bumpy in the stock market, this year has been better and many people have significant appreciation in their portfolios. Appreciated stock makes a great charitable gift, even if the stock is one you want to continue to hold.
For example, if you want to contribute $20,000 to charity before the end of the year and you have $20,000 worth of stocks with a cost basis of $15,000, you might consider giving the stocks instead of cash. This would result in a $20,000 tax deduction. You could then take the $20,000 cash you had planned to give and repurchase the same stocks. You wind up with the same portfolio position but now you have a $20,000 cost basis in the stocks instead of a $15,000 cost basis. So you get the double tax benefit of a charitable deduction along with stepped up basis, and your favorite charities get the financial support they need.