The shares you have held for more than a year can leave your account as a charitable gift at their full market price. The built-in gain inside them never becomes taxable income. On a $150,000 gift of employer stock that cost you $40,000, that is $110,000 of gain the tax code never sees. At the top long-term rate plus the 3.8 percent surtax on investment income, the tax you do not pay on it is $26,180 [1][5][6]. Cash cannot match that. Funding a cash gift means selling the shares first and paying the capital gains tax on the way out.

The big picture:

I have read this part of the code more than once, and the whole advantage rests on a single label. The statute calls a gift “capital gain property” when the asset’s sale at market value would have produced long-term gain, and for a vested share that means a holding period longer than one year [3][4]. Give a lot younger than that and the deduction falls back to what you paid, because the statute strips out of it any gain that would have been short-term [3].

Clear that line and the ceiling becomes a share of your income rather than a strict dollar cap. A gift of such shares to a public charity counts only up to 30 percent of your contribution base, which the code defines as adjusted gross income without a net operating loss carryback [3]. The remainder survives: it is treated as a gift made in each of the five years that follow, applied in order of time [3]. The same guide adds a detail that catches people out: the ceiling for a gift of shares is separate from the 30 percent ceiling on other gifts, and neither one reduces the other [1]. The rule behind it does the same math with real dollars, allowing $6,000 of capital gain property against a $20,000 contribution base, which is the 30 percent ceiling applied to a number [2].

By the numbers

  • 30 percent — Ceiling on the year: A gift of shares to a public charity counts up to 30 percent of adjusted gross income, so a $400,000 base carries $120,000 of gift value this year [3].
  • $30,000 — The spillover: The amount above that ceiling is not lost; it is treated as a gift made in each of the five following years [3].
  • $22,000 — What the 50 percent box leaves: Publication 526’s example gives land worth $28,000 with a basis of $22,000, and making the election reduces the deduction to that basis [1].

What I’d watch:

The lots that qualify are the ones held longest, and in a grant that vests over four years those are usually the shares with the smallest cost basis. So the gift takes out the most embedded gain per share, which follows from the arithmetic rather than from any strategy: the same dollar of deduction removes a larger untaxed gain from the oldest lot [3][4]. What I keep circling is how rarely that ordering gets chosen on purpose.

  • The transfer happens in kind: The shares move to the charity without being sold first, keeping the gain unrealized [1].
  • The paperwork is the short form: Publicly traded shares go on Section A of Form 8283 once the year’s noncash total passes $500, not into the appraisal section [1].
  • The year is the year of delivery: The deduction belongs to the year the property is handed over, which pushes most decisions into late December [1].

Before any of that matters, the position itself has to be worth shrinking. A hold-versus-sell model puts the concentration risk and the vesting schedule into one view.

The catch

Where I’ve landed is that the advantage is real and bounded. Three limits sit under it.

  • A floor sits in the same paragraph. The code text carries a 0.5 percent floor: the deduction is allowed only to the extent the year’s gifts exceed half a percent of that base [3]. This piece does not compute it, and it trims the first dollars off every gift.
  • A loser is the wrong gift. Where the shares are worth less than you paid, the deduction is limited to market value and the fall in price cannot be deducted at all [1]. Selling and giving the cash is the route that keeps that loss usable, because the gift route does not.
  • An overstatement is priced. Claim 150 percent or more of the correct value and the penalty is 20 percent of the tax you underpaid, once the shortfall passes $5,000 [1].

The deduction lowers your taxable income; it does not refund tax. What it is worth depends on the rate you pay, which none of these sources sets for you.

At a glance

The shift: Employer shares can leave your account as a gift at full market value, so the gain inside them is never taxed, which cash cannot do. The number: 30 percent of adjusted gross income caps the year’s deduction for shares, and the excess waits up to five years. The risk: Shares held a year or less deduct at cost, and the box that lifts the ceiling cuts the deduction back to basis.

Related reading

Sources

[1] IRS, Publication 526 (2025), Charitable Contributions — https://www.irs.gov/publications/p526 [2] 26 CFR § 1.170A-8, Limitations on charitable deductions by individuals (eCFR, current edition) — https://www.ecfr.gov/current/title-26/section-1.170A-8 [3] 26 U.S.C. § 170, Charitable, etc., contributions and gifts (Cornell LII) — https://www.law.cornell.edu/uscode/text/26/170 [4] 26 U.S.C. § 1222, Other terms relating to capital gains and losses (Cornell LII) — https://www.law.cornell.edu/uscode/text/26/1222 [5] IRS, Net Investment Income Tax — https://www.irs.gov/individuals/net-investment-income-tax [6] IRS, Topic no. 409, Capital gains and losses — https://www.irs.gov/taxtopics/tc409