Conversation tips for Advisors: Minimizing capital gains

What are the tax implications of selling stock first and donating the proceeds?

Rather than selling securities first and donating after-tax proceeds, your clients can donate long-term appreciated securities directly to Fidelity Charitable and eliminate capital gains. Selling the stock first and donating the proceeds means your client will pay capital gains tax and the charity ultimately receives a smaller donation.

You’re likely already talking to clients about capital gains considerations—you can easily include the charitable strategy as part of the conversation.

Help your clients further by identifying long-term assets with the highest appreciation in their portfolio.

Conversation Tips

Tip #1

When securities are donated rather than sold, there is no capital gains tax on the sale. The more highly appreciated the securities are, the greater the tax savings (assuming the asset has been held for more than one year). Clients are able to take a tax deduction for the fair market value of the long-term appreciated securities, up to 30% of their adjusted gross income for gifts to public charities.

Tip #2

Donating long-term appreciated stocks or mutual funds with an unknown or hard-to-find cost basis may eliminate your need to research the basis.

Tip #3

Help clients understand that by donating rather than selling the securities, they may be eligible for all of the immediate tax benefits associated with their donation, plus gain the flexibility to support many charitable causes over time with one contribution.

Tip #4

Even beyond publicly traded securities, appreciated non-publicly traded assets such as privately held stock, Bitcoin and real estate can be donated with the same tax benefits.

Tip #5

Let your clients know how receiving and liquidating shares of a security is too much of an administrative burden for some charities. This solution eliminates that burden.