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The article was very good - it explained how the tax benefits of charitable stock donations work, but...

You made an error in your calculation of the overall benefit.

The differences are:

1. Charitable organization gains 20k from Jerry, 17k from Tom.

2. Jerry has an effective tax deduction $840 more than Tom (the $3k cap gains tax is effectively paid by the charity as it's deducted before they get the contribution).

An alernative way of looking at it (that's easier to comprehend) is if both philanthropists give $20k - Tom in cash, Jerry with stock. In that case, Jerry has the tax deduction of $5600, Tom has a deduction of $4760 and a liability of $3k - net $1760 decuction. For the charities it's virtually identical (barring effects of brokerage fees & stock volatility).


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