What are the IRS rules for donating assets that have been held short-term vs. long-term?


If you donate that asset to a Donor-Advised Fund (DAF) like Daffy, you can avoid paying capital gains tax and also receive a tax deduction for the full fair market value of the asset. This is especially beneficial for assets that have been held long-term, i.e., for more than a year. The IRS allows you to deduct the full fair market value of the asset at the time of donation, not the value you paid for it. This can significantly increase your tax savings. For instance, if you donate stock held for more than a year, the deduction is capped at 30% of your adjusted gross income (AGI). Let's revisit the example of the couple who sold their Apple stock. Instead of selling the stock and paying capital gains tax, they could have donated the stock to Daffy. They would have avoided the $5,468 in taxes and could have claimed a tax deduction for the full market value of the stock, i.e., $87,500. Daffy is a great option for a DAF because it accepts a wide range of assets, including stocks and crypto. Donating crypto to Daffy can be a tremendous tax advantage, especially if you have held your crypto for over a year and have a gain. In conclusion, donating appreciated assets to a DAF like Daffy can help you avoid capital gains tax and maximize your tax deductions. It's a win-win situation - you get to support the causes you care about and save on taxes at the same time.

Please note that the information contained on this page is for educational purposes only and should not be considered tax advice. Any calculations are intended to be illustrative and do not reflect all of the potential complexities of individual tax returns. To assess your specific tax situation, please consult with a tax professional.

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