If I donate depreciated stock to charity, can I deduct both the market value and the capital loss?
No. You should only donate appreciated stock. If you own a stock at a loss, you can only deduct the FMV (fair market value) when you donate. Instead, you should sell it, take the loss on your taxes, and donate the cash. No, it doesn't work like this. Your charitable contribution is limited to the FMV. In your scenario your charitable contribution is limited by the FMV, i.e.: you can only deduct the worth of the stocks. It would be to your advantage to sell the stocks and donate cash. Had your stock appreciated, you may be required to either deduct the appreciation amount from the donation deduction or pay capital gains tax (increasing your basis to the FMV), depending on the nature of your donation. In many cases - you may be able to deduct the whole value of the appreciated stock without paying capital gains. Read the link below for more details and exceptions. In this scenario, it is probably more beneficial to donate the stock (even if required to pay the capital gains tax), instead of selling and donating cash (which will always trigger the capital gains tax). Exceptions.   However, in certain situations, you must reduce the fair   market value by any amount that would have been long-term capital gain   if you had sold the property for its fair market value. Generally,   this means reducing the fair market value to the property's cost or   other basis. You must do this if: The property (other than qualified appreciated stock) is contributed to certain private nonoperating foundations, You choose the 50% limit instead of the special 30% limit for capital gain property, discussed later, The contributed property is intellectual property (as defined earlier under Patents and Other Intellectual Property ), The contributed property is certain taxidermy property as explained earlier, or The contributed property is tangible personal property (defined earlier) that: Is put to an unrelated use (defined later) by the charity, or Has a claimed value of more than $5,000 and is sold, traded, or otherwise disposed of by the qualified organization during the year   in which you made the contribution, and the qualified organization has   not made the required certification of exempt use (such as on Form   8282, Donee Information Return, Part IV). See also Recapture if no   exempt use , later. See more here.
In the United States investing towards donation is a great idea because you can donate appreciated securities directly rather than donating cash.  Notice how much this can benefit you: So you get to both (a) donate untaxed money and then (b) deduct that unrealized money from your income total on your tax return. With the above in mind, a good strategy for investing towards this type of donation would be to pick securities that are likely to increase in market value but not likely to produce any other sort of income.  So bonds (which produce lots of interest income), or stocks with dividends, or equity mutual funds (which distribute dividends as capital gains) would all be suboptimal for this purpose. Of course, an even better strategy would be to establish a widely diversified investment portfolio without thought to future donations.  Then, once a year (or whenever), evaluate all your investments and find some where the market value has increased.  Then donate some of those shares.  No special advance planning necessary. Note that your tax consequences could be more complicated depending on your exact situation.  Read the section about Capital Gain Property in IRS Pub. 26 for all the details.  There may be special limits on the amount you can deduct.  Also, donations of short term capital gains are treated much less favorably, so make sure you donate only long term capital gain property. "I know your ""pain"".  But don't worry about investing the money right now -- leave it uninvested in the short term.  You have other stuff you need to school up on.  Investment will come, and it's not that hard.  In the short term, focus on taxes.  Do some ""mock"" run-throughs of your expected end-of-year taxes (use last year's forms if this year's aren't available yet).  Must you pay estimated tax periodically throughout the year?  The tax authorities charge hefty penalties for ""forgetting"" to do it or ""not knowing you have to"".  Keep an eye out for any other government gotchas.   Do not overlook this!  This is the best investment you could possibly make.  Max out your government sanctioned retirement funds - in the US we have employer plans like 401K or Keogh, and personal plans like the IRA.  This is fairly straightforward.  Avoid any ""products"" the financial advisors want to sell you, like annuities.  Also if you have the Roth type IRA, learn the difference between that and a normal one.  There are some tricks you can do if you expect to have an ""off"" year in the future.  Charitable giving is worth considering at high income levels.  Do not donate directly to charities.  Instead, use a Donor Advised Fund.  It is a charity of its own, which accepts your tax deductible donation, and holds it.  You take the tax deduction that year.  Then later, when the spirit moves, tell your DAF to donate to the charity of your choice.   This eliminates most of the headaches associated with giving.  You don't get on the soft-hearted sucker lists, because you tell the DAF not to disclose your address, phone or email.  You don't need the charity's acknowledgement letter for your taxes, since your donation was actually to the DAF. It shuts down scams and non-charities, since the DAF confirms their nonprofit status and sends the check to their official address only. (This also bypasses those evil for-profit ""fundraising companies"".) It's a lot simpler than they want you to know.  So-called ""financial advisors"" are actually salesmen working on commission.  They urge you to invest, because that's what they sell.  They sell financial products you can't understand because they are intentionally unduly complex, specifically to confuse you.  They are trying to psych you into believing all investments are too complex to understand, so you'll give up and ""just trust them"".  Simple investments exist.  They actually perform better since they aren't burdened down with overhead and internal complexity.  Follow this rule: If you don't understand a financial product, don't buy it.   But seriously, do commit and take the time to learn investment.  You are the best friend your money will have - or its worst enemy.  The only way to protect your money from inflation or financial salesmen is to understand investment yourself. You can have a successful understanding of how to invest from 1 or 2 books. (Certainly not everything; those ingenious salesmen keep making the financial world more complicated, but you don't need any of that junk.)   For instance how do you allocate domestic stocks, foreign stocks, bonds, etc. in an IRA if you're under 40?  Well... how do smaller universities invest their endowments? They all want the same thing you do.  If you look into it, you'll find they all invest about the same.  And that's quite similar to the asset mix Suze Orman recommends for young people's IRAs.  See? Not that complicated.  Then take the time to learn why. It isn't stupid easy, but it is learnable.   For someone in your tier of income, I recommend Suze Orman's books.  I know that some people don't like her, but that segues into a big problem you'll run into:  People have very strong feelings about money.  Intense, irrational emotions.  People get it from their parents or they get sucked into the ""trust trap"" I mentioned with so-called financial advisors.  They bet their whole savings on whatever they're doing, and their ego is very involved.  When they push you toward their salesman or his variable annuity, they want you to agree they invested well.  So you kinda have to keep your head low, not listen too much to friends/family, and do your research for yourself.  John Bogle's book on mutual funds is a must-read for picking mutual funds and allocating assets.  Certain financial advisors are OK.  They are ""fee only"" advisors.  They deal with all their customers on a fee-only basis, and are not connected to a company which sells financial products.  They will be happy for you to keep your money in your account at your discount brokerage, and do your own trading on asset types (not brands) they recommend.  They don't need your password.  Here's what not to do: A good friend strongly recommended his financial advisor.  In the interview, I said I wanted a fee-only advisor, and he agreed to charge me $2000 flat rate.  Later, I figured out he normally works on commissions, because he was selling me the exact same products he'd sell to a commission (free advice) customer, and they were terrible products of course.  I fired him fast." A public company should have a link for investor relations, which should help provide a trail of basis if this is a matter of company buyout, takeover, etc.  This gets you close, but if you don't have an exact date, it will just be close, not exact.  One clean way out of this, assuming the goal is to get rid of the stock and move on, is to donate the shares to charity. You will take the present value as a deduction, and be done. You can use a charitable gift fund such as those offered by Schwab or Fidelity, so if say, the shares are worth $20K, and you typically donate $5K per year, the fund lets you do this transaction at once, then send to the charities you wish over the next few years. "Do I make money in the stock market from other people losing money? Not normally.* The stock market as a whole, on average, increases in value over time. So if we make the claim that the market is a zero-sum game, and you only make money if other people lose money, that idea is not sustainable. There aren't that many people that would keep investing in something only to continue to lose money to the ""winners."" The stock market, and the companies inside it, grow in value as the economy grows. And the economy grows as workers add value with their work.  Here's an analogy: I can buy a tree seed for very little and plant it in the ground. If I do nothing more, it probably won't grow, and it will be worth nothing. However, by taking the time to water it, fertilize it, weed it, prune it, and harvest it, I can sell the produce for much more than I purchased that seed for. No one lost money when I sell it; I increased the value by adding my effort.  If I sell that tree to a sawmill, they can cut the tree into usable lumber, and sell that lumber at a profit. They added their efforts and increased the value.  A carpenter can increase the value even further by making something useful (a door, for example). A retail store can make that door more useful by transporting it to a location with a buyer, and a builder can make it even more useful by installing it on a house.  No one lost any money in any of these transactions. They bought something valuable, and made it more valuable by adding their effort.  Companies in the stock market grow in value the same way. A company will grow in value as its employees produce things. An investor provides capital that the company uses to be able to produce things**, and as the company grows, it increases in value. As the population increases and more workers and customers are born, and as more useful things are invented, the economy will continue to grow as a whole.  * Certainly, it is possible, even common, to profit from someone else's loss.  People lose money in the stock market all the time.  But it doesn't have to be this way.  The stock market goes up, on average, over the long term, and so long term investors can continue to make money in the market even without profiting from others' failures. ** An investor that purchases a share from another investor does not directly provide capital to the company.  However, this second investor is rewarding the first investor who did provide capital to the company.  This is the reason that the first investor purchased in the first place; without the second investor, the first would have had no reason to invest and provide the capital.  Relating it to our tree analogy: Did the builder who installed the door help out the tree farmer?  After all, the tree farmer already sold the tree to the sawmill and doesn't care what happens to it after that.  However, if the builder had not needed a door, the sawmill would have had no reason to buy the tree." The thing you get wrong is that you think the LLC doesn't pay taxes on gains when it sells assets.  It does. In fact, in many countries LLC are considered separate entities for tax properties and you have double taxation - the LLC pays its own taxes, and then when you withdraw the money from the LLC to your own account (i.e.: take dividends) - you pay income tax on the withdrawal again. Corporate entities usually do not have preferential tax treatment for investments. In the US, LLC is a pass-though entity (unless explicitly chosen to be taxed as a corporation, and then the above scenario happens). Pass-through entities (LLCs and partnerships) don't pay taxes, but instead report the gains to the owners, which then pay taxes as if the transaction was their personal one. So if you're in the US - investing under LLC would have no effect whatsoever on your taxes, or adverse effect if you chose to treat it as a corporation. In any case, investing in stocks is not a deductible expense, and as such doesn't reduce profits. No, you may not deduct the charitable contributions of your children. The Nest covers this in detail: The IRS only allows you to deduct charitable contributions that you personally funded, whether the contribution was made in your name or in someone else's. If your child or dependent makes a donation to a charity, you are not allowed to claim it as a tax deduction. This is true even if your dependent does not claim the contribution on his own tax return because he opts for the standard deduction rather than itemizing or claims exemption. Now, had you constructed the transaction differently, it's possible you could've made the contribution in your child's name and thus claimed the deduction.  Allowance is technically a gift, and if she agrees to forgo allowance in exchange for you making a contribution, well, the IRS can't really complain (though they might try if it were a large amount!). Contributions in the name of someone else, but funded by yourself, are deductible: [Y]ou can deduct contributions you make in someone else’s name. So if you donated a certain amount of money to XYZ charity in your child’s name, for example, you would be able to deduct this amount on your taxes, as long as the deduction requirements are met. You will need to keep accurate records of the payment along with the receipt from the organization to prove you financed the donation. If you have a software company, that can produce a box of software for $5, but the box sells for $100. (You have to make a profit and cover development costs) But then you give these boxes to charity, that is a cost of $5 each and a tax rebate of $100 x 40% = $40. A profit of $35 per donation of $5.  Note: You can only do this if you have taxable profit to offset it against. The way the wash sale works is your loss is added to your cost basis of the buy.  So suppose your original cost basis is $10,000.  You then sell the stock for $9,000 which accounts for your $1,000 loss.  You then buy the stock again, say for $8,500,  and sell it for $9,000.  Since your loss of $1,000 is added to your cost basis, you actually still have a net loss of $500. You then buy the stock again for say $10,500,  then sell it for $9,500.  Your $500 loss is added to your cost basis,  and you have a net loss of $1,500. Since you never had a net gain, you will not owe any tax for these transactions.