Christa has made a $25,000 pledge to the American Red Cross (a public charity).Christa expects AGI of $200,000 this year.Which of the following assets should she donate?

Question

Quizplus · Accepted Answer

Donating appreciated securities, like the stock purchased three years ago for $18,000 with a current FMV of $25,000, provides two benefits for the donor. First, the full fair market value of the asset can be deducted on their tax return as a charitable donation. Second, the donor can avoid realizing the capital gains that would result from selling the asset.

In contrast, donating cash or stock that has decreased in value (such as the stock purchased six months ago for $28,000 with a current FMV of $25,000) would provide a smaller tax deduction and no capital gains tax savings.

Therefore, choice (B) is the best option for Christa to donate.

Christa Has Made a $25,000 Pledge to the American Red