Q&A: Selling stocks to donate the proceeds to charity

Q: I've decided to dump some stocks that have lost money. Since I also want to boost my tax deduction for charitable donations, I may give the shares to my favorite charity or sell them and donate the proceeds. Which approach is best?

A: Sell the stocks and donate the cash. That way, not only can you deduct the charitable gift, but you can also use the capital loss from the stock sale to offset any capital gains from other investments. What if you don't have any capital gains this year? Then you can deduct some or all of the loss from your ordinary income - up to $3,000 worth if you're married and file a joint tax return with your spouse, or $1,500 if you file separately or you're single. If your capital loss totals more than $3,000, the excess will be carried forward so you'll be able to take advantage of it in the future.