The Twelve Days of Taxmas – Donate Stock and Repurchase It
As Christmas approaches, Klatzkin is putting a twist on a holiday classic. But rather than filling your head with drummers drumming and golden rings, we’re focused on providing tips through “The Twelve Days of Taxmas” blog series that could help minimize your tax liability.
On the fifth day of Taxmas, my accountant gave to me a tip to donate stock and repurchase it. Charitable giving has intrinsic rewards and immediate (and future) tax benefits. You can maximize your charitable giving deduction by donating appreciated securities instead of cash.
Charities do not pay taxes on the sale of the stock, so they receive the maximum donation value of the shares. After donating the securities, you can buy back the shares at a higher value than when you originally purchased them. If you sell the same shares in the future, your basis for capital gains tax is now much higher, making the capital gains tax liability much smaller.
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©2021 Klatzkin & Company LLP. The above represents our best understanding and interpretation of the material covered as of this post’s date and should not be construed as accounting, tax, or financial advice. Please consult your tax advisor concerning your specific situation