Quick answer
Can you donate pre-IPO or restricted stock to charity?
Yes. Long-term private or restricted stock given to a public charity or DAF is deductible at appraised fair market value, and you avoid the capital gain. You must give before a sale is effectively certain, get a qualified appraisal above $5,000, and expect only a basis deduction if the stock goes to a private foundation.
Key takeaways
- 01Give before a sale is practically certain, or the IRS can tax the gain to you anyway.
- 02Private stock over $5,000 needs a qualified appraisal and Form 8283 Section B.
- 03Gifts to a private foundation are usually limited to your cost basis.
- 04Unvested RSUs and options generally cannot be given for a market-value deduction.
| Deduction | Appraised fair market value (public charity or DAF) |
|---|---|
| Appraisal | Qualified appraisal above $5,000 |
| Form | Form 8283 Section B |
| Private foundation | Generally basis only for non-listed stock |
| Timing risk | Assignment of income once a deal is near-certain |
| Listed restricted stock | Rule 144 and company policy still apply |
The Short Answer
Can you donate pre-IPO or restricted stock?
Yes. Long-term private or restricted stock given to a public charity or DAF is deductible at appraised fair market value, and you avoid the capital gain. But the gift must be made before a sale is effectively certain, you need a qualified appraisal over $5,000, and a private foundation generally only allows a basis deduction.
New to stock gifts? Start with Donate Appreciated Stock and Save a Fortune on Taxes.
Timing
Why does gift timing matter so much before a deal?
Under the assignment-of-income doctrine, if a sale is already practically certain when you give, the IRS treats you as having sold the shares and given cash. You owe the gain tax. Courts look at whether the deal was legally binding or near certain, not just signed. In Ferguson v. Commissioner (9th Cir. 1999) the gift came after a tender offer had effectively succeeded. In Hoensheid v. Commissioner (Tax Court 2023) a gift two days before closing was taxed to the donor, and the deduction was also denied for a defective appraisal.
Safe zone
No term sheet or signed LOI. Give now.
Grey zone
Risk rises as the deal firms up. Get counsel's sign-off.
Danger zone
Once the sale is near certain, a gift is likely an assignment of income.
Too late
You sold. Give cash and pay the tax.
Chart
Capital gains tax on $2M of founder stock ($20K basis)
Run Your Numbers
What is the right gift worth, and to whom?
Calculator
Private stock gift: timing and recipient
Long-term private shares; compares a DAF or public charity with a private foundation.
Gain tax avoided by giving in time
–
Deduction value: DAF / public charity
–
Deduction value: private foundation
–
Illustrative only; not tax advice. Ignores the 30%/20% AGI limits, the 0.5% floor, appraisal discounts and state tax.
Appraisal
What paperwork do private-stock gifts need?
Qualified appraisal for gifts over $5,000
Non-publicly-traded stock over $5,000 needs a qualified appraisal by a qualified appraiser, dated no earlier than 60 days before the gift and received before your return is due.
Form 8283 Section B
Signed by the appraiser and acknowledged by the charity. Over $500,000, attach the appraisal to the return.
Written acknowledgment
Contemporaneous receipt from the charity for any gift of $250 or more.
Company consent
Check transfer restrictions, right of first refusal and board approval before you promise anything.
Appraisal Defects: Courts have denied entire deductions for appraisal flaws. Use a credentialed appraiser who follows the regulations, and expect discounts for lack of marketability.
Where Embark fits
Giving some founder shares? Price the ones you keep.
Once your shares are liquid, enter the ticker to see targeted income on the position.
- A gift is gone for good; Embark keeps the upside yours
- $0 tax at contribution through Section 721 mechanics
- Targeted 10%+ annual income for accredited investors
Run the numbers
Live prices · takes under a minute · no obligation
Rule 144
What about restricted or control stock in public companies?
Restricted public stock (Rule 144) can be given. The charity generally tacks on your holding period, but it still needs the legend removed before it can sell, which usually means an opinion from issuer counsel. Insiders must also check trading windows and file Form 4 (gifts are reportable). Affiliates should confirm with counsel how volume limits apply to the charity. Many DAF sponsors have teams for this.
| Issue | Rule 144 public stock | Pre-IPO private stock |
|---|---|---|
| Valuation | Market price (high/low average) | Qualified appraisal |
| Form 8283 | Section A or B | Section B over $5,000 |
| Main risk | Transfer delays past Dec 31 | Assignment of income, appraisal |
| Best recipient | Public charity / DAF | DAF that accepts complex assets |
Edge Cases
What about QSBS, options and RSUs?
Can Work
- Long-term common or preferred shares
- Vested shares from exercised ISOs or NSOs held over a year
- Partial gifts of some lots
Watch Out
- Unvested RSUs or unexercised options (generally cannot be given for a deduction)
- QSBS whose gain would be excluded anyway: the charitable benefit may be smaller than selling
- Shares held one year or less (basis-only deduction)
Founders weighing many paths should also read estate planning for concentrated stock and charitable lead vs. remainder trusts. For deduction caps, see the 2026 charitable deduction limits; for DAF mechanics, see donor-advised funds for appreciated stock.
Keeping the Rest
What about the shares you are not giving away?
Founders rarely want to give away their whole stake. For the portion of a concentrated position you want to keep, Embark contributes the stock into an SPV as an in-kind partnership contribution under Section 721 mechanics, with $0 tax at contribution. The SPV targets 10%+ annual income while you keep the upside. Embark is a different tool with a different job. It does not give anything to charity and earns no deduction. Accredited investors only; income is targeted, not guaranteed, and contributed shares have a 3-year lock-up.
Many families pair the two: give the lowest-basis lots to a charity or DAF, and put the core holding to work. See the Embark 721 strategy and the Charitable Remainder Trust vs. Embark comparison.
FAQ
Frequently asked questions
Can I donate shares of a private company?
Yes, if the charity accepts them and the company allows the transfer. You need a qualified appraisal above $5,000.
When is it too late to donate stock before an acquisition?
Once the sale is practically certain, usually around a binding agreement. Give early and get legal advice.
Why does a private foundation give a smaller deduction?
Under §170(e), gifts of non-publicly-traded stock to private foundations are generally limited to cost basis.
Can I donate unvested RSUs?
Generally no. Wait until they vest, then hold more than a year for an FMV deduction.
Do I need an appraisal for publicly traded stock?
No. Publicly traded securities are valued at market and are exempt from the qualified appraisal requirement.
Who can be a qualified appraiser?
Someone with recognised credentials who regularly values this kind of property and is not the donor, the charity or a related party. The appraisal is dated no earlier than 60 days before the gift.
Does the company have to approve the transfer?
Usually. Transfer restrictions, rights of first refusal and lock-ups often require company consent, so start weeks before you need the deduction.
What if the charity sells the shares soon after?
If it sells within three years and the gift was over $5,000, it files Form 8282. That does not by itself change your deduction for stock.
Sources
Primary sources
Sources
Cite this article
Embark Funds Research. “Donating Restricted or Pre-IPO Stock.” Embark Funds, updated October 15, 2026. https://www.embarkfunds.com/insights/donating-restricted-or-private-stock
Not tax, legal or securities advice: This article is educational. Charitable, securities and tax rules depend on your facts and your company's policies. Work with a CPA, an estate attorney and, for insiders, securities counsel before acting. Embark income figures are targets, not guarantees, and contributed shares have a 3-year lock-up.
Charitable Giving with Appreciated Stock Series
4 of 7
Keep reading
Donate Appreciated Stock and Save a Fortune on Taxes This Year
Give shares instead of cash and you get two tax wins at once: no capital gains tax on the growth, and a deduction for the full market value. Here is how it works in 2026, after the One Big Beautiful Bill Act changed the math.
QSBS & Section 1202 for Founders The 2026 Rules After the OBBBA
The One Big Beautiful Bill Act made QSBS bigger and more flexible for stock issued after July 4, 2025: a $15M cap, partial exclusions after 3 and 4 years, and a $75M asset test. Here is what applies to your shares, and what to do when your stock does not qualify.
Rule 144 Explained Selling Restricted & Control Stock
Rule 144 is the safe harbor that lets affiliates and holders of restricted stock resell publicly without registration. For affiliates it caps how much you can sell every three months. Here is the math.
Donor-Advised Funds for Appreciated Stock
A donor-advised fund lets you give stock today, take the deduction this year, and choose charities later. Here is how the deduction, the limits, the fees and the sponsors work in 2026.
Founder Shares? Give Some, Earn on the Rest.
Earn Income on Your Concentrated Position, Not Just a Deduction
Donating stock removes shares from your life for good. For the position you intend to keep, Embark contributes it in-kind into an SPV ($0 tax at contribution, Section 721 mechanics) and targets 10%+ annual income. Accredited investors only.