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HCR Wealth Advisors Plans Donations

HCR WEALTH ADVISORWith the holiday season quickly approaching, the number of charitable donations is on the rise. This is a regular occurrence as 29% of all giving on the Network for Good platform was received during December in 2016. With 11% of donations being given during the final three days so of the year so there is still time to plan. HCR Wealth Advisers note that to make the greatest impact on the charity and alleviate the tax impact, planning must be done properly. One of the best donation methods is through the stock.


There are four primary advantages of donating stock instead of cash:

Increase Gift Size

When donating stock to a charity, no tax liabilities are incurred so the donor receives the benefit of a tax deduction. Since the donor does not need to pay the Capital Gains Tax, the donation is typically larger.

Remove Tax Liability

As mentioned, donating an appreciated stock removes the entire liability which can be significant. HCR Wealth Advisors explains that the Federal Capital Gains Tax can be upwards of 20% with the addition of a state tax and 3.8% as the Medicare Tax.

Tax Deductibility

Charitable donations could also be tax-deductible for those who itemize. Stock donations are limited to 30% of the donor’s adjusted gross income.

Use of Cash

When donating stock and depositing cash into the portfolio of an equal amount allows the cash to continue working in the stock market. This also allows for the purchase of stock at a higher cost basis thus lowering future tax liability and purchasing a variety of investments to allocate assets.

Donating cash seems like a no-brainer since it can decrease the donor’s taxable income thus reducing tax liabilities. According to HCR Wealth Advisors, the benefit to the charity is they will receive a higher dollar amount since taxes are not removed in the transfer. While cash donations are incredibly generous, they do not make financial sense when attempting to maximize the gift while lowering the tax impact.

This article is provided for informational purposes only and should not be interpreted as investment advice.

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