It’s usually better to contribute low-basis stock — shares with a large unrealized gain — because you defer the hefty capital gains tax you’d owe if you sold them outright. You can contribute high-basis stock (with little gain), but the tax deferral benefit is smaller.
Think of it this way:
If you bought stock for $100k and it’s now worth $500k (low basis, big gain), contributing it lets you diversify and avoid paying tax on the $400k gain today. That gain becomes part of the Pod assets.
If instead you contributed stock you bought for $400k and it’s now worth $500k (high basis, small gain), you’re only deferring tax on the $100k gain. Still good, but less impactful.
Of course, the stock’s investment prospects matter too. You should also consider which stock you’re comfortable diversifying away from. But from a tax perspective, the larger the gain (lower basis), the more you benefit from the exchange fund structure.
One note: You can only claim bonus depreciation on the portion of your contribution equal to your outside basis. In certain cases, that might make higher-basis stock worth contributing.
Please read our full disclosures before making an investment decision.