You Can't Just Sell. But You Can Give It Away – Tax-Free.

I spoke to someone last week sitting on a PLTR position he's wanted out of for years. The gain is massive. Every time he runs the numbers on a sale, he walks away – most of what he'd realize would go straight to the IRS.

I asked if he gives to charity. He does. That one question changed everything.​

How a DAF Changes the Equation

When you transfer appreciated shares directly into a donor-advised fund, you don't sell them first. The DAF receives the shares at full fair market value, you receive a charitable deduction for that full amount, and the capital gain disappears entirely. The DAF then liquidates the position tax-free and the proceeds sit in the account, ready to be granted to whatever causes you care about on whatever timeline makes sense.

The result is that you've reduced the position, received the deduction, and paid no capital gains tax – and the charity receives more than they would have if you'd sold first and donated the after-tax proceeds.

Why Selling First Is the Wrong Move

When you sell appreciated stock and donate the proceeds, the IRS takes their cut before the charity sees a dollar. Depending on your combined federal and state rate, a significant portion of the gain is gone before you can do anything useful with it. Contribute the shares directly instead and the full value goes to the DAF, you get the full deduction, and the gain never gets taxed. That's not a loophole – it's how the charitable deduction is designed to work. Donated property has been valued at fair market value, not cost basis, for decades. Most investors just never had an advisor who brought it up.

You Don't Have to Give All of It

A partial contribution works just as well. You can use the DAF to chip away at the position over time, generating deductions in high-income years while offsetting gains you're realizing elsewhere in the portfolio from rebalancing, real estate, or a business sale. It's one of the more flexible tools in tax planning and one of the most consistently underused.

If you have a position you've been sitting on because selling feels too expensive, a DAF is worth a closer look. For a lot of people – including the person I spoke with last week – it changes the math entirely.