Offsetting cg event with charitable donation - deduction limit?

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jennrod12
Posts: 1
Joined: Sat Jan 22, 2022 2:01 pm

Offsetting cg event with charitable donation - deduction limit?

Post by jennrod12 »

I have an unexpected capital gains event. My former company is being sold for cash and I have a lot of shares. I thought I would open a Donor Advised Fund (DAF) and contribute some shares before the sale closes, so I don't have to pay capital gains on those shares. I would also get a tax deduction for the donation. Other than this capital gain, my income from pension and Social Security is about $100k.

I found this nifty website to run various donation scenarios to determine how much I'd like to donate. https://smartasset.com/investing/capita ... XxsKzJJ7Ju However, it will not let me enter itemized deductions greater than my Annual Income, which it defines as the income separate from my capital gains, which is $100k.

Is it true that if I donated, say, $150k, I could only take itemized deductions of $100k, even if I still had capital gains of about $300k above that amount?
Last edited by jennrod12 on Sat Jan 22, 2022 4:45 pm, edited 1 time in total.
MrJedi
Posts: 3540
Joined: Wed May 06, 2020 11:42 am

Re: Offsetting cg event with charitable donation - deduction limit?

Post by MrJedi »

Deducting appreciated shares to DAF is limited to 30% of your AGI.

Keep in mind if you are donating shares, the shares that you are donating do not count toward your income (this is precisely how you are avoiding a capital gains tax, the unrealized capital gain never goes into your income in the first place).
rkhusky
Posts: 17764
Joined: Thu Aug 18, 2011 8:09 pm

Re: Offsetting cg event with charitable donation - deduction limit?

Post by rkhusky »

MrJedi wrote: Sat Jan 22, 2022 2:57 pm Deducting appreciated shares to DAF is limited to 30% of your AGI.
Thanks for this info. I mistakenly thought it was 60%.
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