The $10,000 stock and the $100,000 deduction

It is the middle of September. You have about fifteen weeks left in the year.

I bring that up because almost every tax move worth making has a date attached to it, and most of those dates land before December 31. After that the year is closed. Your return does not decide anything. It just reports what already happened.

So here is what is still on the table.

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The check you were going to write anyway

On a recent Tax Tip Thursday I walked through a strategy most taxpayers have no idea exists. It starts with a condition.

You have to actually want to give. If you are not charitable, this whole thing is nonsense and you should skip down to the next section.

Still with me? Good. Then the only real question is which dollars you use.

Cash in your checking account has already been taxed. Stock sitting in a brokerage account carries gain you have never paid a dime on.

I ran the numbers on NVIDIA in that video because a lot of people actually hold it and it has run up hard. Say you bought $10,000 worth and it is sitting at $100,000 today. Give those shares straight to your church or a nonprofit and you deduct the full $100,000. The $90,000 of appreciation never gets realized, which means it never gets taxed to anybody.

You paid $10,000 for something and took a $100,000 deduction off it. That hardly ever happens in the tax code.

Sell the stock first and you hand the whole advantage back. The sale realizes the gain, you owe on it, and the organization gets whatever is left after.

Two things have to be true. The shares have to sit in a taxable brokerage account, not an IRA or a 401(k). And you need to have held them longer than a year.

Then there is the part that makes this a September email instead of a December one. Plenty of smaller nonprofits cannot accept securities yet and have to open a brokerage account first. That takes weeks. December 28 is not when you want to find that out.

Read it here: How Does Donating Appreciated Stock to Charity Work?

Pulling money out will not lower the bill

I get asked some version of this every December. If I take a distribution before year-end, does that help?

No. Distributions are not deductible. A distribution comes out of profit, which means the business already earned that money and the tax already ran on it.

Emptying the account does nothing to the number on the return. The things that do move that number are different decisions entirely, and every one of them has to happen while the year is still open.

Read it here: Are Owner Distributions Tax Deductible?

This Tiktok advice is a trap

Every November somebody tells a business owner to go spend money before year-end.

Sometimes that is right. Often it is somebody spending a dollar to save thirty cents and calling it a strategy.

I wrote the full year-end walkthrough a while back and it still holds up. Read it now instead of in December, while you can still act on it.

The Complete Guide to Year-End Tax Planning for Small Business Owners

And the companion piece on the two moves that feel like good planning and take money out of your pocket.

2 Tax Planning Mistakes That Cost Small Business Owners

Somebody has to be watching the calendar

A tax preparer takes your documents after the year has closed and produces a return. Good ones are careful and fast, and by the time your file lands on their desk every decision above is already history.

Every item in this email had to get decided before that. That is the whole difference.

Read it here: What's the Difference Between a Tax Preparer and a Tax Advisor?

What I would do with the next two weeks

Get your books current through August. Put a real profit number in front of somebody who can tell you what it means. Then decide what is worth doing before December, while doing it is still possible.

That is why we run a fixed monthly fee, year round. The conversation only helps if it happens while the year is open (with good data!).

If nobody is watching your calendar right now, we would love to help. We walk through the whole thing here: www.mire.group/work-with-us

Make it count,

Marcus