He Sold the Berkshire Shares, Then Donated the Cash. Medicare Counted the Gain Before Charity Got a Dollar
Selling appreciated stock and donating the cash feels like a clean, generous move, but Medicare scores your income at a step that comes before the charity deduction even appears on your return, and the gap between those two lines can…
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A 72-year-old retiree has held Berkshire Hathaway (NYSE:BRK-B | BRK-B Price Prediction) shares for decades. This fall he sells $100,000 worth of stock he bought for $10,000, then writes a check for the full amount to his church’s building fund. He assumes the gift wipes out the income Medicare sees. For his income tax bill, the gift helps. For Medicare, the $90,000 gain stays on his return, and it will raise his premiums two years from now.
The stakes depend on where your income sits. Only about 8% of people with Medicare Part B pay the income surcharge, called IRMAA. Joint filers start paying above $218,000 of income, and single filers above $109,000. If a stock sale still leaves you well under your line, the surcharge won’t reach you.
How the Sale Lands in Medicare’s Income Figure
Social Security sets IRMAA using modified adjusted gross income (MAGI), which it defines as adjusted gross income plus tax-exempt interest. Municipal bond interest is tax-free, but it still counts. Selling appreciated stock realizes the capital gain and puts it into AGI.
The donation appears at a later step on the return. A charitable deduction generally occurs below AGI, so it lowers taxable income and leaves MAGI untouched. Medicare uses the number with the full gain still in it.
What the Gain Costs This Couple in 2028
IRMAA works on a two-year look-back: 2026 income sets 2028 premiums. Say he and his wife normally report MAGI of $200,000 on a joint return. Below $218,000, each pays the base $202.90 Part B premium plus their own Part D plan premium. With the gain added, MAGI rises to $290,000, which falls in the second tier ($274,000 to $342,000). Using 2026 tables as the example, since the 2027 and 2028 brackets aren’t set yet:
| Choice | 2026 Joint MAGI | IRMAA Surcharge, Per Person, Monthly (Part B + Part D) | IRMAA Surcharge, Per Couple, Annual |
|---|---|---|---|
| Sell shares, donate cash | $290,000 | $240.40 | $5,769.60 |
| Donate shares directly | $200,000 | $0 (standard premiums only) | $0 (standard premiums only) |
That surcharge includes $202.90 for Part B and $37.50 for Part D. It doubles each spouse’s Part B bill to $405.80 a month, and the household pays the same amount whether the money went to charity or into a brokerage account.
Why Form SSA-44 Won’t Rescue Him
Form SSA-44 lets you ask for a lower IRMAA only when income drops after a qualifying life-changing event: marriage, divorce, a spouse’s death, stopping or cutting back work, loss of income-producing property, loss of pension income, or an employer settlement. A capital gain falls outside that list, no matter how much it raised MAGI. One more trap to keep in mind: if a spouse dies, the survivor files single, and surcharges start above $109,000, half the joint line. The same income can then land in a higher tier.
Give the Shares and the Gain Never Hits the Return
Donating appreciated shares directly may avoid realizing the gain while still supporting the charity. For stock held more than a year, the deduction is generally based on fair market value and subject to a 30%-of-AGI limit for gifts to public charities. As of 2026, a new charitable-deduction floor also applies, so only contributions above 0.5% of AGI are deductible.
Amounts limited by the percentage rules can generally carry forward for up to five years. The key Medicare point stays the same: if he gives the shares instead of selling them first, the $90,000 gain never enters his MAGI (we walked through donor-advised funds, QCDs, and appreciated-stock gifts together in a free tax-smart giving guide).
Because he’s over 70.5, he also has another giving option: a qualified charitable distribution (QCD) from his IRA. In 2026, he can direct up to $111,000 through QCDs to eligible charities, and the qualified amount stays out of AGI.
Moves to Make Before December 31
- If you haven’t sold yet, transfer the shares in kind. Ask your broker to send the shares directly to the charity or to a donor-advised fund. Confirm you’ve held them for more than a year before you start the transfer.
- If you already sold in 2026, a QCD cannot erase the gain. It can still keep a planned IRA distribution out of AGI if the money goes directly from the IRA to an eligible charity. That can help someone already close to an IRMAA line, but only by preventing additional taxable IRA income from piling on. IRA owners must be at least 70.5 to use a QCD.
- Check estimated MAGI before your next sale. If one sale would push you over a bracket line, spread it across two tax years or give part of the position directly.
Charity can reduce the tax cost of generosity, but it cannot make a gain disappear after the stock has already been sold. Decide how you’ll give before you place the sell order.
Contact [email protected] for any questions or corrections.
Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
