A block of stock bought for $2,000 and worth $10,000 today carries $8,000 of growth that has never been taxed. Sell it, and the Internal Revenue Service (IRS) takes a share of that growth before any charity sees a dollar. Give the shares themselves to a 501(c)(3) such as the Veterans Transition Center of California (VTC), and the tax on the growth never comes due, while the deduction stays at the full $10,000 of market value.
That gap is the reason gifts of stock exist. Two rules decide whether it is real for you. You must have held the shares for more than one year, and your deduction for the year is capped at 30 percent of adjusted gross income (AGI). A third rule is new with the 2026 tax year, and it takes a small bite out of what an itemizer can deduct. The arithmetic for all three is below.
Why a gift of shares skips the capital gains tax
You skip the tax because you never sell. A gain becomes taxable when you sell the asset, and a gift is not a sale, so the growth on the shares is never reported as income on your return. The charity is tax-exempt, so when it sells the shares to fund its work, it owes nothing on that growth either.
IRS Publication 526 (opens in a new tab) calls what you gave capital gain property. The definition is property you would have recognized a long-term capital gain on, had you sold it at market value on the day of the gift. Capital assets held more than one year count, and shares of a listed company are the plainest example. For that property, Publication 526 says you can generally use the fair market value of the property when you figure the deduction.
The rate you sidestep is 0, 15, or 20 percent of the gain, set by your taxable income, per IRS Topic no. 409 (opens in a new tab). A further 3.8 percent net investment income tax (opens in a new tab) lands on investment gains once modified adjusted gross income passes $200,000 for a single filer or $250,000 for a married couple filing jointly.
The arithmetic on a hypothetical $10,000 position
The numbers below are a worked example, not a prediction about your return. Say you bought shares years ago for $2,000, they are worth $10,000 now, and your long-term rate is 15 percent.
- Sell first, and the $8,000 of growth is a long-term gain. The federal tax on it is $1,200, before any state tax, which leaves $8,800 to give.
- Give the shares instead, and the charity receives all $10,000. Your deduction is $10,000, and the $1,200 is never owed.
The stock gift is worth $1,200 more to the charity and $1,200 more on your Schedule A, off one $10,000 position. On a rate of 20 percent plus the 3.8 percent investment tax, the same $8,000 of growth would have cost $1,904 instead. Cash is the simpler path, and VTC takes cash online through its donate page, but the simpler path costs the charity the tax.
Stock held a year or less is a different animal
Shares owned for one year or less are ordinary income property, and the rules turn around. Publication 526 puts the deduction at market value minus the amount that would have been ordinary income or short-term capital gain, which in practice limits it to what you paid.
The publication’s own example is a person who donates stock held for five months. Market value on the day of the gift is $1,000 and the basis is $800, so the deduction is $800. The $200 of appreciation buys nothing. Shares bought last spring are worth holding until the anniversary passes, and then some, because the one-year clock is measured in days rather than tax years.
How much of it you can deduct in one year
A gift of appreciated stock to a public charity is capped at 30 percent of AGI for the year. Cash to the same charity sits under a separate and higher cap of 60 percent, a limit that federal law made permanent starting with the 2026 tax year. Publication 526 is the place to read the interaction, because the two caps stack in a set order when you give both in one year.
Going over the cap does not waste the gift. Publication 526 allows you to carry the excess forward and deduct it in each of the next five years until it is used up, though not beyond that. An election in the same publication lets you take a 50 percent limit on capital gain property instead of the 30 percent one. The price is steep: your deduction drops to what you paid for the shares. That trade is rare, and it belongs in a conversation with a tax preparer rather than in a search result.
What changed with the 2026 tax year
Two changes in federal law reach every gift made from 2026 forward. The first is a floor. Taxpayers who itemize lose the deduction on the first half of one percent of adjusted gross income they give away, counting cash and non-cash gifts together, per the IRS summary of the new provisions (opens in a new tab). At an AGI of $150,000, that floor is $750. A single $10,000 gift of stock and nothing else would be deductible at $9,250 rather than $10,000. A household at that income that gives $600 across the year deducts none of it.
The second change is a new deduction for people who do not itemize, worth up to $1,000 for a single filer and $2,000 for joint filers. IRS Topic no. 506 (opens in a new tab) limits it to cash contributions, so a gift of shares earns nothing under it. That is worth knowing before you move stock: a non-itemizer still avoids the capital gains tax on the growth, since no sale ever happened, and still gets no deduction for the gift.
The paperwork, and the price most people quote wrong
Three details decide whether the gift lands where you meant it to.
- The value is not the closing price. IRS Publication 561 (opens in a new tab) sets the market value of a listed share at the average of the highest and lowest quoted selling prices on the valuation date. A stock that traded between $99 and $103 that day is valued at $101, whatever it closed at.
- The date is the date of delivery. Publication 526 says you make a contribution at the time of its unconditional delivery, and a properly endorsed stock certificate counts as delivered on the day you mail it. Electronic transfers between brokers take days to move, so a gift started in the last week of December can settle in January and land in the wrong tax year.
- The forms are short. The same IRS topic page (opens in a new tab) requires Form 8283 once your deduction for a non-cash gift is more than $500, and the instructions for that form (opens in a new tab) send publicly traded securities to Section A whatever they are worth. Publication 561 exempts those securities from the qualified appraisal that other property over $5,000 needs. For any gift of $250 or more you also need a written acknowledgment from the charity, and Publication 526 makes that acknowledgment a condition of the deduction rather than a courtesy.
Two ways a stock gift goes wrong
Giving shares that are down is the first one. Publication 526 limits your deduction to market value when market value is below what you paid. The difference is gone twice over: you cannot claim it as a gift, and you have thrown away a capital loss you could have used against other gains. Sell the losing position, take the loss on your return, and give the cash.
Sending shares without a word to the charity is the second one. Transfers arrive in a nonprofit’s brokerage account as a line of shares, and a small development office may have no way to tell whose gift it is. The problem lands on you rather than on them. The written acknowledgment the IRS requires on a gift of $250 or more can only come from a charity that knows the gift was yours. One email before the transfer prevents it.
Giving shares to a Veterans charity in Marina
Veterans Transition Center of California is a 501(c)(3) nonprofit in Marina, at 220 Twelfth Street on the historic Fort Ord campus in Monterey County. Since 1996 it has empowered Veterans throughout California to build stable, independent futures. Gifts to it are tax-deductible as allowed by law. A brokerage transfer form will ask for the charity’s legal name and its Employer Identification Number (EIN). Those are Veterans Transition Center of California and 77-0431413.
The first step is a conversation rather than a form. Email info@vtcmonterey.org or call (831) 883-8387 and say what you are thinking of giving. The same address handles the planned-giving questions on the Get Involved page, including gifts through a will, trust, or estate plan.
If you are still deciding where the shares should go, the six checks in our guide to telling a good Veterans charity from a bad one work the same way for stock as they do for cash. Add one check to them. A charity that cannot tell you how it handles a share transfer has told you something about how it is run.
VTC does not give tax or legal advice. Talk with your tax professional before you decide, and make the call to VTC before the shares move.