Over the past 10 or 20 years, all sorts of assets have increased greatly in value. If you are now considering transferring some of those gains to the younger generations in your family or to favored nonprofits, it’s important to take the time to strategize about what non-cash gifts you should make, when and to whom. As we advise our clients, the benefits of strategic giving over time can be many, including:
- Maximizing how much your gift recipients receive
- Lowering your tax bill; and
- Making the people and causes you care about feel empowered
- Establishing a legacy for yourself and/or family
Following are some examples of strategic ways to give, based on tax laws in effect during 2025.
Annual Non-Cash Gifts to Friends & Family
SITUATION: John wants to make a gift to each of his three grandchildren. He happens to own $90,000 worth of Bon Idée stock that he bought for only $9,000. If John sells the stock and gives the grandkids cash, he would owe capital gains taxes on the $81,000 gain. Because he is in the highest income tax bracket, his tax bill on the gain would total more than $19,000 (20% on the gain plus 3.8% net investment income tax). And he would also need to report the gift for tax purposes.
Solution: Instead, John opts to take advantage of the annual gift tax exclusion, which is $19,000 for 2025, and transfer that much in stock to each grandchild. Since he didn’t make a sale, he has no capital gain to report and no gift tax paperwork. The following year, he gives another $7,000 in stock to each child and thus hits his $90,000 gift goal in a way that is income-and-gift- tax-efficient.
The recipients – in this case John’s grandchildren – won’t owe tax until they sell the stock. And when they do sell, they could end up paying zero in capital gains taxes if their total income is relatively low ($48,000) or just 15% for income levels up to $500,000.
There are other very good reasons to give assets instead of cash. It’s a way to encourage kids or grandkids to invest and to save, instead of to spend.
Giving them an actual investment can make them curious about other investments. At a minimum, it will require the kids to do some work if they want to cash out.
Should you give away assets that have lost value? No. You would be better off selling those assets at a loss and giving your beneficiary cash.
Gift recipients are not allowed to claim a loss on gifted property and you can use the loss to offset other gains you may have.
What about the transfer of closely held businesses? Significant stakes in many closely held businesses have been transferred through gifts. Spouses can together give up to $38,000 per year to any number of people using just annual gift exclusions. A married couple with three children could transfer $114,000 of value annually (as of 2025).
Gifts larger than that in any one year are not taxed immediately. Instead, a gift return must be filed to report the gift. Then, if such gifts over a lifetime or at death total more than the allowable lifetime exclusion (now almost $13.99 million per person), the federal gift or estate tax will kick in. Thanks to the 2017 Tax Cuts & Jobs Act, the federal estate tax exclusion is double what it used be in 2017 and will remain at these higher levels at least until the end of 2025. If not renewed by Congress in 2025, the exclusion will revert back to 2017 levels adjusted for inflation.
Since the start of 2018, the opportunity to gift businesses or other large non-cash assets has been vastly expanded. Quite often, though, such businesses limit who can be the new owner(s). In addition, the business may allow transfers only during certain times of year, and most cut off transfers weeks before year-end. You will want to know well in advance if such transfers are feasible – all the more reason to start planning now.
Bulk Gifts to Charity
Giving appreciated assets to charities has more than a few tax advantages.
You can deduct a substantial portion of the market value of your donation and avoid capital gains taxes. Here’s an example:
- Jane wants to make a $100,000 gift to her alma mater, Worthy College. Jane also happens to have $100,000 in Bon Idée, Inc. stock she acquired in 2015 for only $10,000. Jane decides to give Worthy College this stock.
The benefit to Jane: Since Jane is not selling the stock, she won’t be recognizing the $90,000 in gains, avoiding the investment-related taxes. In addition, she can claim a charitable tax deduction for 2025. Let’s say Jane’s income for the year is $300,000. If she makes a $100,000 gift in stock, her charitable deduction would be $100,000 in 2025. That’s because unlike cash, tax-deductible annual gifts of stock are limited to 30% of adjusted gross income. However, Jane can carry over the unused portion of her 2025 gift — $40,000 – and claim a tax deduction for it in 2026 or future years (pending any changes to tax laws in 2025).
Gifts Made Easy
What you can give annually without having to file a gift tax return (IRS Form 709):
- Up to $19,000 annually to anyone – including of course each of your kids and grandkids. Your spouse can give another $18,000. So $38,000 annually per recipient. This annual exclusion is as of 2025 and indexed to inflation, so it will rise over time.
- Tuition Payments. As long as you make payments directly to a private school, college or other educational institution, and you pay only for the tuition (not room, board, or supplies), none of your payments are counted in terms of gift taxes.
- Medical Expenses. You can pay any amount in medical expenses for others. The only caveats: Payments must be made directly to the provider — hospital, doctor, pharmacy or insurance company; the service or good must be something the IRS would allow as a medical expense.
What if Jane thinks Bon Idée is the next Amazon? No problem. She can use the cash she would have given outright to Worthy College to instead buy Bon Idée shares at current market prices, thus greatly raising her cost basis for this stock and reducing her tax bill when she eventually sells.
The benefit to Worthy College: The college can opt to hold on to the Bon Idée stock or sell it tax-free, since it’s a nonprofit.
Impact of 2017 Tax Law
The Tax Cuts & Jobs Act of 2017, which remains fully in effect through 2025, means being more strategic about charitable giving in any one year. That’s because the standard deduction doubled (to $30,000 as of 2025 for married filing jointly; $15,000 for singles).
What this means: if all your allowable deductions – including charitable gifts – add up to less than $30,000 for the year (for a married couple filing jointly), there is no direct tax benefit from charitable giving.
What to do: Bunch your charitable giving into a single year, so that your itemized deductions are higher than $30,000 for married couples ($15,000 singles). Non-cash gifts are tend to be larger and lend themselves to bunching.
You can give directly to your favorite charity but make sure the charity is prepared to accept a non-cash gift and that the organization understands that you are combining more than one year’s gift. You can also make “bunched” gifts of appreciated securities through Donor Advised Funds (DAFs). If you are giving through a DAF, you have an extra step: designating which charities get the annual grants. You have the flexibility to make a gift every year even though you bunched the tax deduction into a single year.
Time to Plan Ahead!
For non-cash gifts to work well, you should plan well in advance — months and perhaps even years. We have been advising individuals and families on intra-generational wealth transfer and gifting strategies for more than 50 years. We can help you evaluate the options that will work best for everyone involved – you, your family, your business (if applicable) and your favorite charities.
4 Things to Know About Non-Cash Gifts to Charity
- You must own the asset at least a year before giving, if you want the full tax benefit. If less than a year, the gift is valued at how much you paid for it.
- When giving assets to charities, the tax deduction is capped at 30% of your adjusted gross income in any one year (vs. up to 60% for some cash gifts).
- For non-financial gifts (publicly traded stocks, bonds) you have to determine the value. If the value is more than $5,000, tax rules require extra documentation on your tax return.
- Plan in advance for the transfer. For gifts of securities, the transfer must be coordinated between your investment custodian and that of your intended gift recipient. While this is not difficult, it may take from a few days to a few weeks, depending on the security. For real estate and business interests, the transfer could take much longer, requiring the work of attorneys, CPAs and appraisers.
