Usually yes: charitable giving with appreciated stock beats writing a check, and Scotia Wealth Management sees why in reviews, since the charity gets full value and nobody pays tax on the gain. Shortcut: before writing a check, give any company-stock lot you've held more than a year whose basis is under half its current value; sell lots that are underwater instead of giving them. The decision matters most in the years you retire or experience a spike in income, because that's when you're most likely to need withdrawals. This article is written for corporate executives with deferred compensation and concentrated company stock, showing the math behind the choice and the records you'll need to make it.
For most people writing $50,000 or more annually to charity, the cost of selling low-basis shares to fund those checks—roughly $6,000 per year in capital gains tax—outweighs the cost of a stock transfer. The strategy works only for shares held longer than one year and with substantial gains. If your charitable giving is smaller or sporadic, the simplicity of writing checks may still make sense for you.
Peggy is 63, widowed, a senior vice president of sales at a consumer goods company, and retiring this year. She's given $50,000 annually to her college and her favorite health nonprofit, paying by check from her salary. Once her paychecks stop, she'll need that $50,000 to come from the cash she set aside for withdrawals. She has an old position to fill: company shares in her taxable account, held for years, now worth far more than she paid for them. These shares are exactly what we'd suggest she give instead.
The next few sections follow Peggy's year, run the arithmetic step by step, and then give you shortcuts for picking your own lots and spotting gaps in the plan you already have. If you'd like Scotia Wealth Management to flag which lots to give before your next donation, send us your cost-basis report along with your most recent return. Our team will go over it with you.
By Robert Kim, AIF — Wealth Manager | Reviewed by Elena Rodriguez, CFARobert helps tech executives and business owners optimize equity compensation and manage concentrated stock positions.
What happens if you keep writing checks and sell shares to refill the cash?
Peggy has always written $50,000 of checks to charity annually from her salary. Once her paychecks stop this year, that $50,000 will need to come from the cash she set aside for withdrawals. This is where the two habits collide.
To keep her cash intact for living expenses, she plans to refill it by selling low-basis company shares from her taxable account. In any given year, a lot worth $50,000 with a $10,000 basis means $40,000 of realized gain. At an assumed 15 percent capital gains rate, that's $6,000 of tax. The charity still receives exactly $50,000 either way—Peggy just pays the extra $6,000 out of pocket.
Over five years, if each year's lot has a similar basis relative to its value, the pattern repeats: $6,000 per year in capital gains tax, adding up to $30,000. The realized gains also raise the income that Medicare uses two years later to set her IRMAA surcharges (the amount she pays for Parts B and D), a separate concern but a real one. Many corporate executives in Peggy's position have never stopped to ask whether there's a better way. There is.
Peggy's final salary year, run two ways
Peggy is single, retiring this year, with a final-year AGI of about $400,000. Her 401(k) holds $600,000 of company stock (the steps for those shares are handled on our concentrated stock planning page). Separately, her taxable account holds company shares from RSUs that vested years ago. Her oldest lot is worth $100,000 with a $20,000 basis. Let's walk through what happens in two scenarios: one in which she keeps writing checks and selling shares, and one in which she gives the shares instead.
Scenario one: check and sell. Peggy writes her regular $50,000 check in December of this year and again in January of next year. To refill her cash, she sells her $100,000 lot from taxable. That sale realizes $80,000 of gain ($100,000 minus $20,000 basis). At 15 percent, the tax bill is $12,000. Her deduction for the two $50,000 checks is $100,000 if she itemizes. Her net cost: $112,000 out of pocket ($100,000 given plus $12,000 in tax).
Scenario two: give the shares this year. Peggy gives her entire $100,000 lot to her two charities this year while she's still working and her AGI is high. The IRS allows up to 30 percent of AGI in stock gifts ($120,000 in her case), so her gift fits. She realizes zero gain. She receives a $100,000 deduction if she itemizes. Her net cost: $100,000 out of pocket, with the same $100,000 reaching her charities. She keeps her $100,000 of cash for withdrawals. Next year, after her paychecks stop, she'll take the $16,100 standard deduction and won't need to itemize at all.
| Item | Before: writing a check | After: giving shares |
|---|---|---|
| Gift to charity | $50,000 cash | $50,000 of shares |
| Shares sold to refill cash | $50,000 | $0 |
| Gain realized on that sale | $40,000 | $0 |
| Tax at assumed 15% | $6,000 | $0 |
| Deduction if itemizing | $50,000 | $50,000 |
| Cost before deduction | $56,000 | $50,000 |
When is a stock gift worth the trouble, and when should shares go to your son instead?
Here's the shortcut: multiply the gain by your federal long-term capital gains rate. If you've held a lot more than one year and its basis is under half the current value, the math almost always favors giving stock. A $10,000 gift with an $8,000 basis saves about $300 at 15 percent, so a check is simpler.
A lot that has doubled ($5,000 basis per $10,000 of value) saves roughly $750 per $10,000 given. A lot like Peggy's, worth five times its basis, saves $1,200 per $10,000. The saving holds if you itemize and if you take the standard deduction, because it comes from avoiding the gain itself, not from claiming a bigger deduction.
The order matters when you're choosing which lots to give. Use only shares held more than one year—shorter holding periods cap the deduction at your basis, which defeats the point. Start with the lowest basis per share, because that's where the biggest gain is hiding. Skip any lot with a loss—sell those, keep the tax loss, and give cash instead. For RSU shares, remember that the basis is the value on the vesting date, not the purchase price; your brokerage may show this incorrectly, so check the vesting date in your equity plan portal.
Your son is the complication. Shares Peggy keeps until death receive a stepped-up basis, meaning her son would inherit them without paying tax on the gain that built up while she owned them. If Peggy has a lot she'd never sell for withdrawals—shares she'd simply hold forever—that lot might be worth more to her son after the basis step-up than the tax savings of giving it away. The shares worth giving are the ones she'd otherwise sell to fund her withdrawals. Pre-tax 401(k) and IRA balances often make better charitable bequests instead, because her son would owe ordinary income tax on them if he inherited them, while a charity pays nothing. With the $15,000,000 per-person estate tax exclusion in place for now, estate tax isn't usually the driver for most families in this position.
Two rule changes that touch an executive's stock gifts
Officers and directors subject to Section 16 must now report gifts of company stock on Form 4 within two business days, and gifts made during a blackout window get closer scrutiny. Check your company's insider trading policy and blackout calendar before you give; the gift has to be reported either way, but the timing matters for avoiding questions. Recent federal tax changes also added a floor on itemized charitable deductions (only gifts above a small share of AGI count) and a small deduction available to non-itemizers for cash gifts; check the current IRS rules for the exact amounts because they're subject to change. Giving roadmaps drawn up a few years ago often assumed every dollar of giving counted the same way, which favored small annual gifts spread across many years. Now, bunching your stock gifts in high-income years—your final salary year, or a year with a deferred bonus coming in—fits better with the way the deduction works.
When should the transfer start, and which records come first?
Gather these records before you move. Lot-level cost basis comes from your brokerage's unrealized gain-and-loss report; most platforms show this under a portfolio view or a tax-lot section. For RSU shares, the basis reported on your 1099-B can be wrong or show zero, so pull the vesting-date value from your equity plan portal instead.
Last year's Schedule A from your tax return tells you whether you itemized; if you took the standard deduction, itemizing this year becomes a new decision. The charity's transfer instructions give you its DTC (Depository Trust Company) account number and the exact broker where you'll send the shares.
Once the shares land in the charity's account, the gift is complete and the deduction is locked in at that day's value. You'll need to file Form 8283 for any noncash gift over $500 (publicly traded shares don't require an appraisal, so the form is simple), and the charity must send you a written acknowledgment for any single gift of $250 or more before you file your tax return. Keep both documents with your tax records.
Three timing errors are worth avoiding. Too early: shares held one year or less generate a deduction only up to your basis, so on a low-basis lot most of the deduction disappears. Too late: a transfer started in mid-December can miss the December 31 cutoff, because the gift counts on the day the shares arrive in the charity's account, not the day you initiate the transfer, so start in early December. Wrong order: selling the shares first and giving the proceeds is not a gift of stock; it's a gift of cash, and you've already triggered the capital gain. Waiting until your first retired year can also cost you the value of itemizing while your income is still high.
If the stock falls or your health changes after you give
The gift is valued on the day the shares arrive in the charity's account, not the day you start the transfer. If company shares fall 20 percent while the transfer is still in process, your deduction falls with them. Once delivery is complete, a later drop doesn't touch it. The opposite also holds: a rise after delivery isn't a reason to wait and try to time the gift better. A single company's shares can fall sharply, and any investment can lose money, principal included.
Gifts and donor-advised fund contributions can't be unwound. We'd rather Peggy prefund no more than two years of giving and keep two years of spending in liquid cash outside the gift, because needing cash after an irrevocable gift is what really hurts. The money is gone. Health changes, inflation, an unexpected cost—there's no getting it back.
The tax law could also change. The deduction rules shifted recently and could shift again, so bunch only what you'd give within two or three years, not ten years' worth. After age 70 and a half, qualified charitable distributions directly from your IRA may become a better route than gifts from taxable accounts; check the current IRS limit when the time comes.
Have Scotia Wealth Management check your lots before your next gift
Send your lot-level basis report and last year's Schedule A in the fall, and our team will mark which lots to give, which to sell and which to keep for your heirs. If your current giving plan already works, we'll say so; we only change what's broken. We also check whether your company's insider trading policy allows the timing you have in mind. Reviews happen by video or phone, so your location doesn't matter to Scotia Wealth Management. There's no fee that you haven't seen and agreed to in writing.
Common questions on charitable giving with appreciated stock
My employer's matching gift program only matches cash. Should I still give company shares?
Does giving stock really save anything if I'd sell the shares someday anyway?
What happens if the share price drops while the transfer to the charity is still in process?
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This content is general information and education only. It is not individualized investment, tax or legal advice. Investing involves risk, including possible loss of principal. Before making any financial decision, consult a professional about your own circumstances.