Three important considerations when donating non‑cash assets to charity.
Much of America’s wealth is in non-cash assets, like publicly traded stock, real estate, and private businesses. Donating these assets to charity is a smart way to have more impact with your charitable giving and save in taxes at the same time.
Consider giving a non-cash asset that has appreciated for more than one year. The full, fair market value of the asset is tax deductible, and you won’t owe capital gains tax when the charity sells it. That means more money for charity and significant tax benefits for you.
If the asset is illiquid, like shares in a private business, be sure to keep three things in mind.
First, timing is important. Leave enough time between your donation and any liquidation event, such as a share buyback, initial public offering, or acquisition. Otherwise the IRS may consider it a pre-arranged sale.
Second, debt is not tax deductible. Any debt associated with an asset will be reported as income.
Third, you will need a qualified appraisal. This takes time, and you can’t pay for it out of your donor-advised fund.
With these three things in mind and help from Schwab Charitable’s team of experts, it’s simple to make non-cash donations that are tax-smart and more impactful.