When you donate stock before selling it, you can deduct the full fair market value of your charitable stock donation and at the same time avoid paying capital gains tax applicable on the appreciation of donated stocks.

For Example

Imagine that last year you bought some Apple shares for $10,000 which have now doubled in value to i.e $20,000. By donating the total amount to FOIH, you can claim a charitable donation deduction of the current market value of the shares — the full $20,000.

Stock donations are exempt from capital gains tax meaning you do not get taxed for the $10,000 appreciation in stock value.

Stocks held for long periods can set the stage for substantial gains and subsequent tax deductions on sale. Donating appreciated shares, and then buying new shares will reset their cost basis at the current, higher price. This step will reduce future capital gains tax exposure if the stock continues to grow in value.

A diversified stock portfolio is a healthy one. Whether you rebalance your holdings through active shifting allocations or through selling of stocks it is always a good practice to diversify the portfolio.

Donating appreciated stock to charity is an effective means of doing so.

Donating stock that has appreciated for more than a year allows donors to give 20% more than if they sold the stock and then made a cash donation. The maximum federal capital gains tax rate is 20 percent on long-term holdings. Any direct donations of stock to a charity are capital gains exempt. By donating stock you will not only be saving on tax but at the same time make a larger impact by donating more.