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> But no matter what, if they just sold the damn asset and kept the money, they would have more money at the end of the day than they would having gone through
by usaar333 8y ago
> But no matter what, if they just sold the damn asset and kept the money, they would have more money at the end of the day than they would having gone through this rigmarole.
Yes, that's true, but that ignores the personal benefits derived from giving to charity. (In theory, "personal benefit" portion can't be deducted - in reality, it can be).
For instance, in the highest tax bracket in CA, donating $0 basis stock could result in your taxes being reduced by ~80% of the fair market value; i.e. you can donate $X by only paying 20% of X. As long as you derive more than 20% personal benefit from the charitable gift (and that's a low enough threshold it isn't that noticeable), giving to charity might beat selling that stock.
- URSpider94 8y agoThe highest tax bracket in CA is nowhere near 80%. More like 50% (40% federal + 10% state). And appreciated stock held long-term is taxed at the Federal cap gains rate of 20%, so the max is closer to 30%.
- usaar333 8y agoHighest bracket for ordinary investment income is 54.1%. 37% federal income, 13.3% state, 3.8% federal net investment. California uses same tax rate for long term cap gains. So highest long term rate is 37% (20% federal, 13.3% California, 3.8% net investment). If you sell and keep proceeds of $0 basis stock, you get $0.63 per $1. If you donate $1 of said stock, you get up to a $0.54 tax deduction. In this extreme example, there's only a 16% gain by selling vs donating.