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Year-End Tax Strategies - Donor Advisory Funds

Year-End Tax Strategies - Donor Advisory Funds

December 15, 2021

Having a 7-figure realized (or about to be realized) gain of million dollars in stock sales this year and dreading of their taxes? Donating to a Donor Advisory Funds (DAFs) may be the answer. In a nutshell, you can donate the stocks into the fund if the gain is unrealized or donate the cash to receive an immediate tax deduction while having more time to review the options of what charities you will support.

For example, a client, we will call her Samantha, gained 1 million dollars in stock sales this year. Samantha gifted the DAF the $500,000 and received a full tax deduction on her 2020 tax return while setting up a distribution timeline to the various charitable organizations that are dear to her heart. She saved almost $250,000 in taxes by being strategic about her taxes and of course, being generous.

Your CPA and your financial advisor can work together to propose the most advantageous options for you to save on your taxes before the year ends.