Let's say Scott is in the 25 percent federal tax bracket and has $5,000 in appreciated stock he wants to donate. If he sells the stock and donates the proceeds from the sale, he will only end up donating $4,250. The other $750 is used to pay long-term capital-gains taxes at the 15 percent rate. Plus, even though Scott sold $5,000 worth of stock, he can only deduct $4,250.
Instead, if Scott donates the shares directly to the charity, there are no capital-gains taxes, and he can deduct the full $5,000. Even better, the charity will not have to pay any capital-gains taxes when it sells the donated stock.Visit our site for more information about the Tax Benefits of Giving.