Stocks as charitable donations


M

Min Li

Hi all,

I have a simple question: if I donate appreciated stocks to
a charity, can I immediately buy the same stocks? The idea
is to get the charitable deductions, reset the cost basis
while keeping the same stocks. Or is there some kind of
wash-sale rule at work?

More generally, can you buy back an asset that you just
donated to a charity?

Thank you all!

M
 
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B

Barry Margolin

I have a simple question: if I donate appreciated stocks to
a charity, can I immediately buy the same stocks? The idea
is to get the charitable deductions, reset the cost basis
while keeping the same stocks. Or is there some kind of
wash-sale rule at work?

More generally, can you buy back an asset that you just
donated to a charity?
I always do my large donations by giving appreciated
securities, and I've never heard of such a rule. IMHO, it's
one of the few great loopholes readily available to
moderate-income taxpayers.
 
A

Arthur Kamlet

Min Li said:
I have a simple question: if I donate appreciated stocks to
a charity, can I immediately buy the same stocks? The idea
is to get the charitable deductions, reset the cost basis
while keeping the same stocks. Or is there some kind of
wash-sale rule at work?

More generally, can you buy back an asset that you just
donated to a charity?
Since you gave away as a gift apreciated stock, there is no
issue of loss, so no wash sale and you can buy the same
stock immediately with no adverse tax consequence.

Even if you gave away stock at a loss, a bad idea since it
is usually better to sell and take the loss, then gift the
cash, there is no wash sale on the gift of stock. The wash
sale rule is to prevent you from claiming a capital loss
while not being at risk on that stock. Gifting is another
issue entirely and does not generate a wash sale.

__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
 
B

Bruce Raskin CPA

I have a simple question: if I donate appreciated stocks to
a charity, can I immediately buy the same stocks? The idea
is to get the charitable deductions, reset the cost basis
while keeping the same stocks. Or is there some kind of
wash-sale rule at work?

More generally, can you buy back an asset that you just
donated to a charity?

Thank you all!
Why do you want to do that?

The purpose of giving appreciated stock to a charity is to
gain the charatable deduction and avoid the income taxes on
the gain should you have sold the stock.

You cannot retain the original basis for the stock that you
gift to the charity.

If, for some reason you want to keep the original cost basis
of the stock, simply write a check to the charity.

Bruce Raskin, CPA
Small Business and Individual Tax and Accounting Services
 
B

Barry Margolin

I have a simple question: if I donate appreciated stocks to
Why do you want to do that?

The purpose of giving appreciated stock to a charity is to
gain the charatable deduction and avoid the income taxes on
the gain should you have sold the stock.

You cannot retain the original basis for the stock that you
gift to the charity.
That's the point -- he doesn't want to retain the original
cost basis. By donating the stock and then repurchasing it,
the cost basis gets bumped up, but you never have to pay tax
on that gain. He was wondering if the government tries to
prevent you from doing that, in the same way that the wash
wale rule prevents you from taking an immediate deduction
for a paper loss.
 
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M

Min Li

I have a simple question: if I donate appreciated stocks to
Why do you want to do that?

The purpose of giving appreciated stock to a charity is to
gain the charatable deduction and avoid the income taxes on
the gain should you have sold the stock.

You cannot retain the original basis for the stock that you
gift to the charity.

If, for some reason you want to keep the original cost basis
of the stock, simply write a check to the charity.
I regularly donate to charity, and in the past I have always
written checks. This year, it occurs to me that I could
gain extra tax savings by gifting appreciated stocks,
including stocks that I want to continue to own (in this
case, the saving is in the future). So I wasn't talking
about retaining the original basis; in fact, I want to reset
the basis to current price (which for appreciated stocks,
would be higher). Of course it wouldn't make sense to
donate depreciated stocks.

M
 
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