Vanguard, Fidelity Flag Stock-Donation Strategy to Avoid Capital Gains on AI Winners

Vanguard and Fidelity are highlighting a year-end strategy for investors sitting on large gains in AI stocks: donating appreciated shares directly to a donor-advised fund (DAF) rather than selling them. Federal tax law allows long-term appreciated securities to be transferred to a qualified charity or DAF without triggering capital gains tax, with the deduction based on fair market value at transfer rather than the original purchase price, per Vanguard.
Fidelity Charitable illustrated the savings: an investor who bought $20,000 of stock 20 years ago now holding $50,000 in shares, with $30,000 in embedded gains, would owe about $7,140 in combined capital gains tax and Medicare surtax if they sold and donated cash instead. Donating the stock directly eliminates that bill entirely.
Investors can also repurchase the same shares with cash after donating, resetting their cost basis higher while maintaining their market position and adding a charitable deduction — a maneuver Fidelity says does not trigger the wash-sale rule, since that rule applies only to losses, not donations. Using specific-identification cost-basis rules, investors can target their lowest-basis, most-appreciated lots (for example, 2020-purchased Nvidia shares) for the donation.
Evercore Wealth Management's Justin Miller warned that in-kind stock transfers typically take five to ten business days to settle, and the deduction only counts for the tax year in which the shares actually reach the charity — meaning late-December transfers risk sliding into the following tax year. The deduction is capped at 30% of adjusted gross income and can be carried forward for five years, while a new 0.5% AGI floor on itemized charitable deductions took effect Jan. 1, 2026.