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recommended option for donations

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    Updated from my original post.

    I make about 260K/yr  I plan on donating at least 5K to charity this year.


    IBM - a gift from a relative, very low cost basis

    BRKB - low cost basis

    SCHZ, which is the schwab ETF for Aggregate Bond.

    I also have some DFA Large Cap Value I'm inclined to keep as I can't buy more.


    Updated: turns out my gains in SCHZ are less than I thought. I could donate the highest cost shares and move he rest to a municipal bond option. Thoughts? donating highest shares wouldn't get me to 5K.

    I am leaning towards donating from IBM solely, though there is a bit of "that stock is sentimental" holding me back.




  • #2
    Yes but you also don't pay cap gains on donated shares.


    • #3
      You need to donate the shares with the lowest basis and highest capital gain so you will get the maximum write-off. The IBM probably fits that description because your basis is the same as it was in the hands of the person who made the gift to you.

      For example, if the person making the gift paid $5/share for IBM and it's now worth $100/share (I am pulling these amounts from thin air), then you would pay tax on $95/share if you should sell it. But you will get to deduct $100/share when you donate it.
      Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


      • #4
        Maybe consider whether you should bunch your donations on an every-other-year (or every-third-year) kind of basis, to account for the higher standard deduction and the SALT limit.

        That aside, definitely agree that the best thing to donate is whatever has the most built-in gain.


        • #5
          From the diversification perspective, you may consider selling IBM, it's likely the least diversified. BRK.B, SCHZ, and DFA are all likely more diversified than IBM.