It’s generally more beneficial to contribute low-basis stock (shares with a large unrealized capital gain). By contributing low-basis stock to Craft Pod, you defer the hefty capital gains tax you’d owe if you sold that stock outright. High-basis stock (with little gain) can also be contributed, but the tax deferral benefit is smaller.
Think of it this way: if you have stock that you bought for $100k and it’s now worth $500k (low basis, big gain), contributing it lets you diversify without paying tax on the $400k gain now. That gain gets rolled into the Pod assets. If you contributed stock that you bought for $400k and is now worth $500k (high basis, small gain), you’re only deferring tax on $100k of gain – which is fine, but not as impactful. Of course, the investment merits matter too; you should contribute stock that you’re comfortable diversifying away from. But from a pure tax perspective, the more appreciation (low basis) the stock has, the more you stand to benefit from the exchange fund structure.
Note you can only claim bonus depreciation up to your basis so higher basis stock may be better for you in certain circumstances.