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PaperclipPerfector  1yr ago (text post)   5474 thread views

Small-Scale Question Sunday for September 24, 2023

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

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Knowing very little about tax code, I think this shouldn't work because the jump from $50k -> $5million would be counted as profit in some sense, similar to if you buy $50k of stock and then sell it for $5 million. I think it's called an "asset appreciation tax"? So your taxable income would go up by 4.95 million from having an asset you paid $50k for go up in valuation, and then down by $5 million for the donation, giving you a net -$50k (because you spent $50k that you then donated). But I'm not certain this is how it actually works.

You can donate appreciated stock at it's stepped up value and avoid capital gains taxes. It's a very good way to make charitable donations. It is however limited to 30% of your AGI though.

From IRS Pub 526

However, the reduced deduction doesn't apply to contributions of qualified appreciated stock. Qualified appreciated stock is any stock in a corporation that is capital gain property and for which market quotations are readily available on an established securities market on the day of the contribution.

That's definitely how it should work, but I believe is not how it actually works if you donate it. I'm in the same boat as you though and am not exactly an authority on this.

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