How Much Charitable Giving is Tax Deductible?

Here’s a quick example of how that carry forward might be used. Let’s say you have an AGI of $500,000. You also have an appreciated stock that you would like to donate to your donor advised fund (DAF) worth $300,000. Selling it, paying the capital gains taxes and then donating the balance in cash would be much less effective. Instead, consider transferring it in-kind to your DAF and receive a fair-market value deduction and bypass the capital gains tax.Making a donation of $300,000 in-kind exceeds the 30% of AGI deduction limitation on appreciated assets, here’s how the carry-over works. You can however make the donation by transferring the stock to your donor advised fund and take a deduction of $150,000 (30% of $500,000 AGI) and then in the following year you still have another $150,000 deduction to take to use the balance of the $300,000 fair-market value donation.On the other hand, if you were considering a $300,000 donation of cash you could take a full deduction for the gift because the IRS allows up to 60% of your adjusted gross income as a deduction for cash donations and in this example 60% of $500,000 is $300,000, so you wouldn’t have any remaining deductions to carry forward. However, you would still owe the capital gains tax on the transaction.