It’s that time of year when most people are thinking about gift-giving. From Black Friday (the day after Thanksgiving) to the end of the year, we give our families monetary gifts, our employees bonuses, or make charitable donations. Here are five tips for being strategic and intentional with your end-of-the-year donations: 


A Good Deed and a Good Deal – Donate Your Appreciated Assets to Public charities.


Instead of writing a check, consider donating stock or mutual funds from your investment portfolio. If you’ve owned assets for more than a year and the current value is more significant than what you’ve paid for them, you can give the appreciated security to charity. The benefit is that there is no capital gain for you or the charity. You will receive a charitable deduction of up to 50% of your Adjusted Gross Income. 


 Decrease your taxable income by making a qualified charitable donation.


For those who are 70½ years old, the IRS requires that you take a Required Minimum Distribution (RMD) from your IRA annually. This distribution is taxed as ordinary income. However, if you do not need these funds for living expenses, consider using some or all of these funds to donate to a public charity. As long as the donation is at least equal to your Required Minimum Distribution, you will have satisfied your RMD requirement, and the distribution is not taxable to you or the charity. How can you do this? When receiving your RMD, ask your financial advisor to liquidate the needed assets and send a payment directly to the charity. Do not wait until the end of December; ideally, the charity should cash the check before January 1st.


Gifts to Your Family Members 


Consider a gift of appreciated assets (usually stock, mutual funds, or ETFs) to family members (or a good friend) in a lower tax bracket to decrease the taxable value of your estate. The limit for 2022, without going over the gift-tax exclusion, is $16,000. How many gifts of $16,000 can you make? As many as you want. The key is to donate to an individual with a lower tax bracket because your cost basis (the price you paid for the stock or mutual fund) is transferred to the new owner. Ideally, if the recipient sells the asset, their capital gains will be lower than the donors. Be careful about donating to someone younger than 24 years old because the “Kiddie Tax” may apply. 


Consider using a Donor-Advised Fund (DAF)


Donor-Advised Funds (DAF) are an effective way to make a deductible contribution and not worry. Why? Any contribution to a DAF is considered a tax deduction; you can give the funds to charity later. You can also invest your funds in the stock market and provide all or part to charity as your assets grow. DAFs also come in handy when you want to memorialize someone and are unsure what to do. Or, you want to give a substantial gift by pooling assets with friends or family. Regardless of your reason, creating a Donor Advised Fund is an easy way to make a charitable donation.


Whatever you do, be strategic and intentional. Give in a manner that is appropriate for you. At Estess CPAs, we believe information and planning enhance success. Specializing in small business solutions, we believe the key to successfully managing any business starts with well-informed accounting and payroll systems. Accurate and timely data empowers companies to analyze and react to upcoming needs and changes. Our professionals are experts at keeping accounting systems and payroll processes running smoothly.


Estess & Associates, LLC

Small Business Services

7822 Highway 23 

Belle Chasse, LA 70037

(504) 433-5122


Estess & Company, LLC

Certified Public Accountants

128 Lakewood Drive

Luling, LA 70070

(985) 785-1470