Learn how one couple reduced their taxes, eliminated capital gains, and multiplied their charitable impact through a $300,000 donor-advised fund gift at the peak of their income year.
A Smart Way to Turn a Financial Peak into a Kingdom Opportunity
When approaching retirement, one couple found themselves at a financial crossroads. As they entered their final year of full-time employment, deferred compensation and bonuses projected this to be their highest-income year ever.
At the same time, they held a large position in a single stock that had performed extremely well. The gains were substantial, but the future of the stock was uncertain. Should they sell and face significant capital gains? Hold and risk a market drop?
Instead, they chose a third option — one that embodied the Faith Forward Framework and their commitment to their faith and financial stewardship: They utilized our expertise to donate $300,000 of appreciated stock to a Donor-Advised Fund (DAF).
The Strategy in Action
Event | Description | Result/Benefit | Appreciated Stock Gifted | They transferred $300,000 of long-term appreciated stock into a DAF. The stock’s cost basis was only ~$25,000. | No capital gains tax due on the ~$275,000 unrealized gain. |
|---|---|---|
Immediate Deduction | Because they gifted the stock directly to charity (via the DAF), they received a $300,000 charitable deduction. | Reduced taxable income in their final high-earning year. |
Double Benefit | 1) Avoided capital gains tax. 2) Received a full income tax deduction for the gift. | Saved roughly $110,000–$120,000 in combined federal and state taxes. |
Ongoing Investment | The stock was kept invested within the DAF. It continued to grow tax-free. | The stock appreciated further, increasing their charitable capacity. |
Future Giving | The couple could recommend grants from their DAF over future years — including their ongoing tithes. | They “pre-funded” years of giving while capturing today’s tax benefit. |
Timing and Strategic Stewardship: Why They Gave When They Did
Charitable deductions are limited to a percentage of Adjusted Gross Income (AGI)—typically 30% of AGI for appreciated assets. In this specific scenario, the couple’s AGI was $350,000, allowing an immediate deduction of up to $105,000 (30% of AGI) in the current year, with the remaining deduction available to be carried forward for five additional years.
The strategic timing of the full $300,000 DAF gift across two tax years allowed us to maximize their stewardship by achieving the following critical outcomes:
Maximized Deductions
They optimized the allowable deduction available in each tax year.
Smoothed the Benefit
The deduction was strategically applied into retirement years when income dropped to around $200,000 per year from pensions and part-time work.
Zero Loss of Benefit
None of the substantial charitable deduction went unused, securing the greatest possible financial advantage for their mission.
Case Study Snapshot
Year | Household Income | DAF Gift Applied | Deduction Utilized | Carryforward Remaining | Tax Benefit (Est.) |
|---|---|---|---|---|---|
Totals | – | $300,000 total gift | $255,000 total deduction used | – | ~$100,000+ total tax savings | 2024 (final work year) | $350,000 | $150,000 | $105,000 (30% AGI limit) | $45,000 | ~$40,000 |
2025 (semi-retired) | $200,000 | $150,000 (remainder) | $60,000 (30% AGI limit) | $90,000 | ~$24,000 |
2026–2028 | $200,000 (each year) | – | Deducts remaining $90,000 across future years | – | ~$36,000 |
*Exact amounts depend on marginal rates and itemization.*
Why This Strategy Worked
1. They gave at the right time — capturing a major deduction during their peak income year.
2. They gave the right asset — appreciated stock instead of cash, avoiding capital gains.
3. They gave through the right vehicle — the donor-advised fund offered flexibility.
4. They gave with the right perspective — their goal was obedience and impact, not just savings.
Stewardship That Multiplies
What makes this story powerful is not just the tax efficiency — it’s the faith efficiency. Because they planned with eternal impact in mind, their generosity will continue to flow for years to come. The stock that once represented potential risk now represents potential kingdom return.
“Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.”
2 Corinthians 9:7
Key Takeaways
Timing matters
Give in high-income years for maximum tax impact.
Asset choice matters
Appreciated stock gifts can eliminate capital gains.
Structure matters
DAFs provide flexibility for long-term generosity.
Faith matters
Stewardship is both financial and spiritual.
Summary
Without DAF | With DAF | Stock Value | $300,000 | $300,000 |
|---|---|---|
Cost Basis | $25,000 | $25,000 |
Capital Gain | $275,000 | $0 (eliminated) |
Capital Gains Tax | ~$65,000 | $0 |
Charitable Deduction | $0 | $300,000 |
Total Tax Savings | – | ~$100,000+ |
Control of Giving | Immediate spend required | Give over time, grow tax-free |
Legacy Impact | One-time | Multi-year giving from investment growth |
At KERUX Financial, we help believers align their wealth with their witness — using strategies like donor-advised funds to maximize both impact and obedience.
“Command them to do good, to be rich in good deeds, and to be generous and willing to share.”
1 Timothy 6:18
The information contained herein is provided for educational purposes only and should not be construed as investment, tax, or legal advice. Past outcomes are not indicative of future results. The suitability of donor-advised funds or any charitable giving strategy depends on an individual’s unique circumstances and objectives. You should consult with your financial advisor, tax professional, and/or legal counsel before implementing any strategy discussed. Advisory services are offered through Kerux, LLC, a registered investment adviser.
