Because this is the season of giving, you may be considering making a charitable donation to your favorite organization or cause. If so, you should strongly consider making that donation in shares of an appreciated investment rather than cash. With cash, you only get to write off the value of the donation. With appreciated shares, not only do you get to write off the market value of the security at the time of donation, but you also get rid of your tax liability on those shares. That’s a two-for-one tax savings special.
The catch to this is that you must donate shares that have an unrealized gain and that have been held for at least one year and one day. If you donate shares that are at a loss, it actually works against you as you lose your ability to write off that capital loss. If you donate shares held for one year or less, you can only write off your cost basis rather than the current market value.
Contact your charity to find out if they accept stock donations and how to transfer the shares to them. Then talk to your tax and investment advisors to choose the best security to donate.