At a glance
- What it is
- Giving appreciated stock, mutual funds, or ETFs directly to a charity or donor-advised fund instead of selling them and giving cash.
- What it saves
- Federal and Oklahoma capital gains tax on the growth, while keeping a deduction for the full market value.
- Best fit
- Charitable owners with appreciated investments.
- Main catch
- Shares must be held more than a year, and you must itemize to deduct the gift.
- Deadline
- The shares must reach the charity’s account by December 31. Start early; transfers take time.
Key takeaways
- Giving appreciated stock held more than a year directly to charity gives you a deduction for full market value with no capital gains tax.
- It fits charitable owners who itemize, or could itemize by bunching gifts, and hold investments that have grown in value.
- In the illustrative example, giving $20,000 of stock instead of cash avoids $2,250 of federal and $675 of Oklahoma tax on the gain.
- The catch: the shares must reach the charity by December 31, and you must itemize to deduct the gift.
Watch the story
A one-minute story about this strategy. Illustrative story; the people are fictional and are not clients. See all story videos.
The numbers
Picture a business owner who itemizes and plans to give $20,000 to charity this year. They own shares worth $20,000 that they bought several years ago for $5,000, a $15,000 long-term gain.
For illustration purposes. Tax law may change, which may change these calculations slightly.
| Sell, then give cash | Give the stock | |
|---|---|---|
| Value given | $20,000 | $20,000 |
| Gain recognized ($20,000 − $5,000) | $15,000 | $0 |
| Charitable deduction | $20,000 | $20,000 |
Personal tax on the gain (federal and Oklahoma), shown separately
| Sell, then give cash | Give the stock | |
|---|---|---|
| Federal capital gains tax (15% × $15,000) | $2,250 | $0 |
| Oklahoma income tax on the gain (4.5% × $15,000) | $675 | $0 |
The charity gets the same $20,000 either way, and the deduction is the same. The difference is the tax on the $15,000 of growth, which never gets paid. Higher-income owners may also avoid the 3.8% net investment income tax on that gain.
Want to keep the investment? Give the shares, then use the cash you would have donated to buy the same investment back. Your new shares start with a higher cost basis, which means less gain when you sell later.
Could this strategy work for your business?
In a free tax analysis, your tax strategist checks whether it fits and what it could save, using your real numbers.
How it works
- Pick the right shares. Investments held more than a year with the largest gains compared to what you paid.
- Transfer them directly. Your brokerage moves the shares to the charity’s or donor-advised fund’s account. Don’t sell first; selling triggers the gain.
- Get a receipt. A written acknowledgment from the charity, plus Form 8283 with your return for non-cash gifts over $500.
- Deduct the fair market value. Generally the average of the high and low price on the day of the gift.
Using a donor-advised fund
A donor-advised fund (DAF) lets you give shares once, take the deduction this year, and recommend grants to the charities you support over time. It’s also the easiest way to give stock to small charities that can’t accept it directly, and a way to “bunch” several years of giving into one year so itemizing pays off.
Who it fits
- Charitable owners with appreciated investments held more than a year.
- Owners who itemize, or who could itemize by bunching gifts into one year.
- Owners with a concentrated stock position they want to trim.
When it doesn’t fit
- Shares held a year or less, where the deduction is generally limited to what you paid.
- Investments worth less than you paid. Sell those, take the loss, and give cash.
- Owners who take the standard deduction and won’t itemize.
The rules
- Holding period. More than one year to deduct the full market value.
- AGI limits. Gifts of appreciated stock to public charities and donor-advised funds are generally deductible up to 30% of adjusted gross income. Unused amounts carry forward up to five years.
- New floor starting in 2026. Under the July 2025 federal tax law, itemized charitable deductions only count to the extent they exceed 0.5% of your adjusted gross income.
- New cap for the top bracket. Starting in 2026, the tax value of itemized deductions is capped at 35% for taxpayers in the 37% bracket.
- Non-itemizers. Starting in 2026, people who don’t itemize can deduct up to $1,000 ($2,000 for joint filers) of cash gifts to charity, but not gifts of stock or gifts to donor-advised funds.
Risks to weigh
- Year-end delays. Brokerage transfers can take days or weeks in December. A gift that lands in January counts next year.
- Private foundations. Gifts to private non-operating foundations have lower limits and different rules.
- Hard-to-value assets. Gifts of private business interests or real estate need a qualified appraisal and more planning.
How we handle it for clients
With a Cannon & Brown tax plan, we look at your giving plans in the fall, help you choose which shares to give, check the AGI limits and the new 2026 rules, and decide whether bunching gifts through a donor-advised fund makes sense. Because our technology keeps your numbers current all year, we can test this strategy against your real numbers and adjust it as your business changes.
Illustrative example. The business owner and figures on this page are hypothetical, used to explain how the strategy works. They are not a client and not a promise of results. The example assumes shares held more than a year with a $5,000 cost and a $20,000 value, a 15% federal capital gains rate, a 4.5% Oklahoma rate, and a donor who itemizes. The deduction shown is before the 0.5% of AGI floor, which applies the same way to both options. This page is educational and is not tax advice for your situation; tax rules and limits change.
Brooks leads Cannon & Brown Tax Advisors, a forward-thinking tax firm serving business owners in Oklahoma and beyond. He builds year-round tax strategies that help business owners keep more of what they earn and reach their goals. More about Brooks
Common questions about donating appreciated stock
Can I donate stock and then buy the same shares back?
Yes. You can give the shares, then use the cash you would have donated to buy the same investment back. Your new shares start with a higher cost basis, so there is less gain when you sell later.
Should I donate stock that has lost value?
Usually not. For investments worth less than you paid, it generally makes more sense to sell them, take the loss, and give cash.
Can I deduct a stock donation if I take the standard deduction?
Generally no; you need to itemize to deduct a gift of stock. Starting in 2026, non-itemizers can deduct up to $1,000 ($2,000 for joint filers) of cash gifts, but not gifts of stock or gifts to donor-advised funds.
What if my charity can’t accept stock?
A donor-advised fund can take the shares, give you the deduction this year, and let you recommend grants over time, including to small charities that can’t accept stock directly.
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