Sitting on Appreciated Stock?

By: | December 6, 2019

Sitting on Appreciated Stock?

A lot of you may hold stock that has appreciated significantly, and you may be concerned about the tax hit you will face if you sold that stock. There are other options to selling which may provide a tax benefit for you and prevent or defer the recognition of capital gains.

1. Donate the stock to charity

Donating to charity allows you to decrease your tax liability via an itemized deduction and allows you to support the charity of your choice without a large cash outlay.

2. Pay SC taxes via the Exceptional Needs Program

Instead of paying an estimate to the SC DOR, you would donate appreciated securities to the SC Exceptional Needs Program which, in turn, provides you a credit to offset your SC tax liability.

The credit is limited to 60% of your tax liability, so you may need to pay an additional estimated payment, but a significant portion of your taxes could be paid using stock instead of cash.

Below is a link for more information on the program as well as a link to donate.

3. Invest in an opportunity zone after sale

If you have recognized gains, you can elect to invest some or all of the gains, within 180 days, into a qualified opportunity fund and defer the taxes on the gain until 2026.

To get the full tax benefit of the opportunity zone deferral, you must deploy the gain amount by 12.31.9.

Opportunity zones are complex and, in order to properly set up a fund and defer the gain, we recommend enlisting the help of an attorney.

4. Harvest losses at year end

Selling investments at a loss at year end will allow for gains to be offset by the amount of losses, directly lowering your taxable income.

The items listed may be used on their own or in conjunction with each other. If you have any questions or would like more information, please contact our office.

Merry Planning Season from The Lanning Group!