Situation. An individual owning publicly traded stock—held long-term and having a $50,000 fair market value and a $10,000 cost basis—sold the stock. He’s a guy who makes charitable gifts. He’s unhappy when he learns the day after the sale that he could have made an outright charitable gift of the securities and taken a $50,000 charitable deduction. Also, he would have avoided capital gains tax on the stock’s $40,000 appreciation.
Or, he could have transferred the securities to his existing charitable remainder unitrust for a sale and investment by the CRUT. No capital gains would be immediately incurred, and the capital gain would be subject to tax only to the extent deemed paid to him under category two (of the four-category CRUT taxation regime) in satisfaction of his annual unitrust amount.
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