Gifts of Appreciated Stock refer to the transfer of ownership of shares of stock that have increased in value since their purchase to another party, typically a charitable organization or an individual.
These gifts are advantageous because the donor can avoid paying capital gains tax on the appreciation when the stock is transferred. Instead, the recipient (if a charity) can sell the stock without incurring tax on the gain, allowing for a more significant contribution benefit. For example, if a donor bought stock for $1,000 and it is now worth $5,000, gifting the stock allows the donor to avoid the capital gains tax on the $4,000 gain while also potentially receiving a charitable deduction for the fair market value of the stock at the time of the gift.
« Back to Glossary Index