![]() ![]() "One way to mitigate your overall tax bill is to donate those mutual fund shares to charity before the distribution takes place," said Gorman. ![]() They might be a prime asset to give away if you act quickly. Goodwill will be happy to provide a receipt as substantiation for your contributions in good used condition, only on the date of the donation. Certain mutual funds distribute capital gains that can result in taxes to shareholders near the end of the year. Here's one more reason to donate appreciated investments. "But if you're younger and you aren't planning on holding the asset until death for the step up, giving appreciated property to charity might be a win," he said. "If you were going to hold this until death, maybe avoiding the gain is less of a deal for you," said Steffen. If your beneficiary sells the asset right away, he or she won't pay any capital gains taxes. Neither the acknowledgment letter nor receipt need report to the donor the proceeds of sale of donated securities. That means when you die, your heir gets the asset valued as of the date of death. Heirs currently benefit from a provision in the tax code known as the step-up in basis. This might make the best sense for assets you aren't planning on passing to an heir at death. "You're getting a second benefit by getting the gain out of the portfolio," said Tim Steffen, CPA and advisor education senior consultant at Pimco. Another side benefit from giving away stocks or mutual funds that you would have otherwise liquidated: You're diluting your portfolio's concentration in equities without incurring taxes. ![]()
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