Donating stock or cryptocurrency to a donor-advised fund (DAF) like Daffy can provide significant tax advantages. When you contribute long-term capital assets like stock or crypto to Daffy, you are eligible to take an immediate tax deduction for the full market value of the asset in the year the contribution is made. If the asset has appreciated in value since you purchased it, you are not responsible for paying capital gains tax on the gain. This can result in substantial tax savings compared to selling the asset and donating the proceeds.
For instance, if you bought a stock for $1,000 and it has increased in value to $5,000, donating the stock to Daffy allows you to claim a charitable deduction of $4,000 (the difference between the value of the stock when you bought it and its current value). Moreover, you avoid paying capital gains tax on the $4,000 of appreciation.
Donating stock or crypto to Daffy is not only tax-efficient but also a convenient way to support the charities and causes you care about. Many charities are set up to accept stock or crypto donations, making it as easy as transferring the assets from your brokerage account or crypto wallet to Daffy's account.
As the holiday season approaches, consider the potential tax advantages of donating stock or crypto to Daffy. By doing so, you can support the causes you care about and potentially save on your taxes at the same time. Please consult your tax specialist to understand your specific situation when making a stock or crypto contribution. Happy holidays!