New! Fundraise with Daffy Campaigns 🚀

Why is it important to record the cost basis of an asset before donating?

Stock

Daffy allows you to donate appreciated assets like stocks, ETFs, and even cryptocurrencies. The beauty of this is that you can immediately deduct the full fair-market value of the asset on your federal income tax returns for that year, rather than your cost basis. Moreover, since Daffy is a 501(c)(3) organization, they don’t have to pay taxes on liquidating the asset. This means the full amount goes to the charity you care about. It’s a win-win situation for both you and the charity. Let's revisit our example of the couple who sold their Apple shares. If they had donated the shares to Daffy instead of selling them, they could have avoided the $5,468 tax bill entirely. Plus, they could have claimed a charitable deduction for the full fair-market value of the shares at the time of donation, which was $87,500. In conclusion, recording the cost basis of an asset before donating is crucial for tax purposes. It helps you determine whether it's more beneficial to sell the asset and donate the proceeds or donate the asset directly. And if you choose the latter, Daffy is an excellent option for a DAF, especially if you're donating appreciated assets. Remember, charitable deductions are one of the most generous income tax deduction strategies. You can deduct up to 30-60% of your AGI through charitable donations. So, why not make the most of it with Daffy?

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.

Get your Daffy account
Simplify your giving with Daffy, the Donor-Advised Fund for You™. Easily donate to almost every US public charity, track tax-deductible contributions, and access donation receipts all in one place.
Try Daffy for free
Daffy waives all membership fees for members with less than $100 in their fund, so get started today for free!

Don’t forget to download the app

Scan the QR code to get the iPhone app

Download on the App Store.
QR code to download the app from the App Store.

Sources