What if I use appreciated stocks or bonds to establish a Charitable Gift Annuity?
A. Using securities, rather than cash, to establish a Charitable Gift Annuity will not affect the annuity amount or the income tax charitable deduction. It will, as mentioned above, result in part of the annuity payment being taxed to you as capital gain. In effect, part of the annuity that you would have recieved as a tax-free return of principal is replaced by capital gain. Your reportable gain will be spread out over your life-expectancy and the total amount of reportable gain will be less than the amount you would have to report if you sold the stock.
