Giving Appreciated Stock to Charity: The Deduction and the Gain

Can I deduct the full value of stock I give to charity?

Generally yes, if you held the stock more than one year, give it to a public charity, and itemize. The deduction is the stock’s fair market value on the date of the gift, because the Code reduces it only by gain that would not have been long-term capital gain (IRC § 170(e)(1)(A)). The deduction for such gifts is limited each year to 30 percent of adjusted gross income, with a five-year carryover (§ 170(b)(1)(C)).

The starting rule is that a contribution of property is measured by its fair market value at the time of the contribution, reduced as § 170(e)(1) provides (Treas. Reg. § 1.170A-1(c)(1)). IRS Publication 526 states the result for long-held assets: for capital gain property, “you can generally use the FMV of the property.” Capital gain property is a capital asset whose sale at fair market value would have produced long-term capital gain (§ 170(b)(1)(C)(iv)), which means gain on an asset held more than one year (IRC § 1222(3)).

This page is about gifts to charity. The basis and holding-period rules for gifts to family, including how a holding period carries over to someone who received shares as a gift, are on the appreciated stock vs. cash page and the step-up in basis page.

What happens to the gain

The Code computes gain on a “sale or other disposition” as the amount realized over the adjusted basis, and defines the amount realized as the money received plus the fair market value of any property received (IRC § 1001(a), (b)). A donor who gives shares outright and receives nothing in return has no amount realized. Read together with § 170(e)(1), which leaves the long-term appreciation inside the deduction, this means the appreciation is deducted without being taxed to the donor.

The result changes when the donor receives something back:

• Bargain sales. A sale to a charity for less than fair market value is part sale and part gift. Publication 526 says the sale part “may result in a taxable gain,” and the adjusted basis used for the sale part is the share of the whole adjusted basis that the amount realized bears to the property’s fair market value (IRC § 1011(b)).
• Property subject to debt. If the charity or another person assumes a debt on the property, Publication 526 treats the amount of the debt as an amount realized for figuring gain.

When the deduction is reduced

Section 170(e)(1) reduces the fair-market-value figure in the following cases.

• Stock held one year or less. The deduction is reduced by the gain that would not have been long-term capital gain (§ 170(e)(1)(A)). For stock held one year or less, that is all of the gain, so the deduction is generally limited to basis. Publication 526 gives the example of stock held five months, worth $1,000 with a basis of $800: the deduction is $800.
• Gifts to most private foundations. For a gift to or for the use of a private foundation, other than the foundations described in § 170(b)(1)(F), the deduction is reduced by the long-term gain as well (§ 170(e)(1)(B)(ii)). That brings the deduction down to basis.
• The exception for qualified appreciated stock. The private-foundation reduction does not apply to qualified appreciated stock: stock that is capital gain property and for which market quotations are readily available on an established securities market on the date of the contribution (§ 170(e)(5)(A), (B)). The exception does not cover stock to the extent the donor’s contributions of a corporation’s stock to such foundations, counting those of family members, exceed 10 percent in value of all its outstanding stock (§ 170(e)(5)(C)).
• The donor’s election. A donor who elects the higher percentage limit described below takes the reduction to basis voluntarily (§ 170(b)(1)(C)(iii)).

Stock that has lost value. None of this helps with shares worth less than their basis. Publication 526 says that for property with a fair market value below basis, “your deduction is limited to its FMV,” and that no deduction is allowed for the difference between basis and value. The loss is not deductible on a gift. The choice between giving loss shares and selling them first is discussed on the appreciated stock vs. cash page.

The 30% limit and the election

Contributions of capital gain property to a public charity, deducted at fair market value, may not exceed 30 percent of the donor’s contribution base for the year (§ 170(b)(1)(C)(i)). The contribution base is adjusted gross income computed without any net operating loss carryback (§ 170(b)(1)(H)). An excess is carried forward, as a contribution of the same kind, to each of the five succeeding taxable years (§ 170(b)(1)(C)(ii)).

The donor may elect instead to have § 170(e)(1) apply to all contributions of capital gain property made during the year (§ 170(b)(1)(C)(iii)). The effect is a trade:

• the deduction for each such gift falls to basis; and
• the 30 percent limit no longer applies, so the gifts come under the 50 percent limit of § 170(b)(1)(A).

The election covers every contribution of capital gain property made in the year, and carryovers of such contributions from earlier years are reduced as though the election had applied when they were made. Publication 526 states that the choice must be made on the original return, or on an amended return filed by the due date of the original return.

Other limits sit alongside these:

• Capital gain property given to organizations other than public charities, which includes most private foundations, is limited to 20 percent of the contribution base, or less (§ 170(b)(1)(D)).
• For taxable years beginning after 2025, an individual’s charitable contributions are allowed only to the extent they exceed 0.5 percent of the contribution base (§ 170(b)(1)(I)). The statute applies that floor to capital gain property before it applies it to cash.
• The deduction for non-itemizers in § 170(p) covers contributions made in cash. On its terms it does not reach a gift of stock.

The floor, the non-itemizer deduction, and the effect of concentrating gifts in one year are covered on the bunching and donor-advised fund timing page.

A worked example

The following is a hypothetical illustration of the mechanics, not a prediction and not advice. A donor holds publicly traded shares bought several years ago for $10,000 and now worth $50,000. The donor itemizes, has adjusted gross income of $300,000, and wants the shares’ value to go to a public charity. Assume the donor’s long-term gains are taxed at 15%, the deduction offsets income taxed at 24%, and other gifts in the year already exceed the 0.5% floor.

Hypothetical illustration. $50,000 less $10,000 is a $40,000 gain; 15% of $40,000 is $6,000; $50,000 less $6,000 is $44,000; 24% of $44,000 is $10,560; 24% of $50,000 is $12,000; 30% of $300,000 is $90,000. The rates are assumptions chosen to show the mechanics. Actual results depend on taxable income, the net investment income tax where it applies, and state tax.

In the example the charity receives $6,000 more and the donor’s deduction is worth $1,440 more when the shares themselves are given. Had the shares been held one year or less, the deduction for giving them would be $10,000, their basis.

Value and date of gift

Fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither under compulsion and both having reasonable knowledge of the relevant facts (§ 1.170A-1(c)(2)). For listed stock, IRS Publication 561 gives the method: where there is an active public market, the value of each share is the average between the highest and lowest quoted selling prices on the valuation date. Its example is a high of $11 and a low of $9, for a value of $10. The publication gives further methods for days with no sales.

The valuation date is the date of the contribution, and for stock that depends on how the shares are delivered ( § 1.170A-1(b)):

• A properly endorsed certificate delivered or mailed to the charity or its agent is a completed gift on the date of delivery or, if received in the ordinary course of the mails, the date of mailing.
• A certificate delivered to the donor’s own bank or broker as the donor’s agent, or to the issuing corporation, for transfer into the charity’s name is a completed gift on the date the stock is transferred on the corporation’s books.

The second rule matters at year-end. Under it, shares handed to the donor’s own broker in December for transfer are a gift in the year the transfer is recorded on the corporation’s books.

Records and Form 8283

A gift of stock is a noncash contribution, and the Code denies the deduction without the required records. In outline:

• A contribution of $250 or more requires a contemporaneous written acknowledgment from the charity (§ 170(f)(8)).
• A deduction of more than $500 for contributed property requires a description of the property with the return (§ 170(f)(11)(B)), which is made on Form 8283.
• Property for which a deduction of more than $5,000 is claimed ordinarily requires a qualified appraisal, but publicly traded securities are excepted (§ 170(f)(11)(A)(ii)(I), (C)). The Instructions for Form 8283 direct that publicly traded securities be reported in Section A of the form whatever the amount.
• Stock that is not publicly traded does not have that exception.

These thresholds are fixed in the statute. The detail is on the substantiation and appraisals page.

Giving stock to a donor-advised fund. A sponsoring organization of a donor-advised fund is by definition not a private foundation (IRC § 4966(d)(1)), so the private-foundation reduction in § 170(e)(1)(B)(ii) does not apply to a gift to one. The deduction also depends on an acknowledgment from the sponsor that it has exclusive legal control over the assets (§ 170(f)(18)). See donor-advised fund vs. private foundation.

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