Donating Publicly Traded Stock

In 2026, a client donates publicly traded stock held for more than one year to a qualified charity. The stock has a fair market value of $50,000 and a cost basis of $12,000.

Which of the following statements is CORRECT?

1. The client may deduct only the $12,000 cost basis
2. The client recognizes a $38,000 capital gain and receives a $50,000 deduction
3. The client may generally deduct the fair market value and avoid recognition of capital gain
4. The client receives no deduction because the asset is appreciated property