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Taxes, Stocks, and Donations

How the Three Fit Together to Save Money

 

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Having the best options for your clients when tax time comes around is part of being a professional CPA. All clients want to decrease tax burden and increase deductions to maximize after-tax income for the year. There are many options available to help in that pursuit, but some are more well-known than others.


Charitable donations offer a variety of tax planning opportunities to get the largest tax deduction for a client. Donating appreciated assets is more tax-favorable when supporting a nonprofit than donating in other ways. A client's tax deduction is calculated at the fair market value of the stocks without paying any capital gains taxes on the appreciation.


Since the donor isn't paying capital gains taxes on stock donations, more substantial contributions are possible at the same out of pocket cost. It also offers an additional avenue for donations that nonprofits can take advantage of to maximize the gifts they receive each year.


Tax Benefits Associated with Stock Donations


For clients interested in philanthropy, donating publicly traded appreciated stock to a nonprofit offers the best tax advantages. There are several benefits to clients who choose to donate stock shares. As a CPA, there are many reasons to recommend that clients choose this option.

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Source: CPA Practice Advisor

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