Partial Versus Full Stock Withdrawals
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Partial Versus Full Stock Withdrawals
The explanation of the various partial withdrawal options and their effects linked in this message from Laurie is very clear and helpful. One situation that appears not to be addressed there or elsewhere is if the partially withdrawing member uses a brokerage's donor advised charitable account. Could the member take a partial withdrawal in appreciated stock (observing all of the caveats about his/her cost basis in the club), and without selling it first, simply transfer the stock to his/her brokerage's donor advised charitable account like any other stock he/she might own? Under this scenario, would the member's cost basis in the withdrawn stock then become irrelevant for income tax purposes? Yes, this could be advantageous. Once the shares are transferred to the partially withdrawing member, they are treated the same as any other appreciated stock that member might own in her personal account. Contribution of the shares to a donor advised fund would enjoy the usual benefits. Of course, with the passage of TCJA, donor advised funds have lost some of their appeal because it's harder to get the double benefit (capital gains avoidance AND charitable deduction). That is, the combination of SALT cap and higher standard deduction mean that fewer taxpayers see a tax benefit from charitable contributions. Ira Smilovitz, EA The explanation of the various partial withdrawal options |
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