Gifting Appreciated Stocks: What You Need to Know

Justin Clark, CFP®,
Senior Wealth Manager

What if part of your investment portfolio could help you transfer wealth to the next generation or leave a lasting charitable legacy?

Gifting appreciated stocks—those that have increased in value since purchase—offer a powerful, tax-efficient way to do just that.
This guide outlines the benefits of gifting appreciated holdings, strategies to maximize their impact, and important factors to consider.
Key Takeaways
  • Appreciated stocks are shares that have gained value since you originally bought them, creating a capital gain.
  • Gifting them can help avoid capital gains taxes, reduce the value of your taxable estate, transfer wealth efficiently, and support charitable giving.
  • To qualify for full tax benefits, the stock must be held for over a year.
  • Donating long-term appreciated stock can allow you to give up to 20% more than selling it and donating the cash.1
Why Gift Appreciated Stocks?

There are many potential benefits to gifting appreciated stocks, depending on your unique financial situation:

1.

Avoid capital gains taxes. When you gift appreciated assets to family members or qualified charities, you can typically avoid paying capital gains taxes on the appreciation—which can be as high as 20% for long-term holdings, plus a 3.8% net investment income tax if your income exceeds IRS thresholds.2

Tip: Consider donating a portion of appreciated stock you’d like to hold long-term, then repurchasing new shares. This resets your cost basis, potentially reducing your future capital gains tax liability if the stock continues to grow.

2.

Transfer wealth to family members. In 2025, you can gift up to $19,000 per person ($38,000 for married couples) without triggering federal gift tax.3 If your family sells the gifted stock, they’ll owe capital gains tax based on your original cost basis. However, if you have an adult child or other family member in a lower tax bracket, they may pay less on the gains when they sell.

Tip: Be mindful of “kiddie tax” rules on unearned income if gifting to students under 24 or minor children, which are taxed at your rate if it exceeds the annual limit of $2,700 in 2025.

3.

Support your favorite charities. Donating appreciated stocks held over a year to a qualified charity can support your philanthropic goals while offering tax advantages. By donating appreciated stock directly, you can avoid the capital gains tax you’d incur from selling it first and may also deduct the stock’s fair market value on your income taxes, subject to IRS limits.

Tip: Deductions for non-cash charitable donations to private foundations are limited to 30% of your adjusted gross income (AGI), compared to a 60% AGI limit for cash gifts.5

How Do I Gift Appreciated Stocks?

Follow these simple steps to gift your appreciated holdings:

  • Save documentation: For gifts over $250 to charity, you’ll need a written acknowledgment and your brokerage statement for tax reporting.6
  • Choose the recipient: Tax implications vary depending on whether you’re gifting to an individual or a qualified charity.
  • Notify your brokerage: Let your advisor or brokerage firm know your intent to gift shares—they’ll supply the forms and handle the transfer.
  • Gather account details: Obtain the recipient’s brokerage information or the charity’s transfer instructions.
What are Tax-Efficient Gifting Strategies?

These three strategies can help remove appreciation from your estate, support your loved ones and philanthropic efforts, and take advantage of certain tax advantages:

1.

Make the most of your lifetime gifting exclusion. In 2025, the lifetime federal gift and estate tax exemption is $13.99 million ($27.98 million for couples).3 Gifting appreciated holdings can shift future growth out of your estate, reducing its taxable value.

2.

Set up an irrevocable trust. A grantor retained annuity trust (GRAT) lets you remove appreciation from your estate while receiving annuity payments; the remaining growth can then pass to heirs with minimal estate and gift tax.

3.

Create a donor-advised fund (DAF). With a donor-advised fund, you can support charities you care about, avoid capital gains taxes, and deduct the fair market value of the assets on your income taxes.

What Are Important Considerations?

Your financial advisor can help you determine whether transferring appreciated stocks makes sense as part of your overall wealth plan. Key factors to keep in mind include:

  • Gifts to individuals that exceed annual gift tax exclusion limits require filing a gift tax return.
  • When gifting to individuals, they assume your cost basis and may owe capital gains taxes when they sell based on the original purchase price.
  • The stock must be long-term (or held for at least one year) to maximize tax benefits.
  • Depending on your investment strategy, you may need to rebalance your portfolio after the gift.
  • Gifting appreciated stocks near year-end can help maximize deductions for the current year.
Get Expert Advice

Gifting appreciated stocks can be a strategic way to share your wealth with others while optimizing your taxes.

Our financial planning specialists can help you time gifts effectively, align them with your broader goals, and optimize your portfolio.

Reach out today for a personalized review of your investments.

Sources
1https://www.fidelitycharitable.org/articles/4-reasons-to-donate-stock-to-charity.html#:~
2https://www.nerdwallet.com/article/taxes/capital-gains-tax-rates
3 https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax
4 https://www.fidelity.com/learning-center/personal-finance/kiddie-tax
5 https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions
6  https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contributions-written-acknowledgments

All content presented is for educational purposes only and should not be construed as a solicitation or offer to sell securities or provide investment, tax, or legal advice. All examples are hypothetical, for illustrative purposes only, and are merely arithmetic calculations. They are not representative of the performance of any type of investment, security, or strategy offered by the firm. Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. Hypothetical returns do not reflect actual trading and may not be indicative of the performance of any specific investment.

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