Gifting Gains

One of the challenges of managing portfolios is the tax repercussions of moving out of certain positions and sectors and realizing the capital gains accrued in taxable portfolios. It’s a factor to consider when a stock no longer fits your investment strategy, yet you still have a sizable gain on the position.



Becoming tax intelligent


Do you expect it to fall enough to justify your tax bill in April after selling it? Is it going to recover? It’s important to have a strategy in place to address your annual capital gains and income and how that fits into your overall tax situation. One strategy is to donate highly appreciated securities making it a part of your charitable giving.


If you’re planning on donating to an organization, you should find out if stock donations are accepted. You can gift the same amount you were planning, but by giving it in the form of a stock you’re avoiding paying the capital gains on those shares. 


The same applies to giving to your children and grandchildren. If you’re planning on gifting funds for that new home or car, give them some shares instead. They can then sell the shares to raise the cash and pay the capital gains taxes at their lower tax rate. 


The higher your income tax bracket, the less benefit you have of liquidating positions to raise cash after factoring in your tax liability. This strategy can stretch the impact you’re already making and how much you have to give in the future. Everyone has a cause that’s near and dear to their heart. 


We can help you plan accordingly


Let us know the next time you’re looking to donate to your favorite charity or give a gift to a loved one. We can help you make the most of your donation by reducing your future tax burden with your present generosity. Contact us today.