let's continue my example to answer your questions...
I understand you are going to donate "ALL" to charity. But what is "ALL"? You only own 300 shares (from my example) ; you do not own 500 shares. So you can only donate the 300 to charity.
The other 200 shares are 'water under the bridge'; you do not get them back and you can not donate them.
When the restriction period ended, those shares that you were given by your company was considered 'earned income' so you must pay taxes on it (which you did!). Those shares weren't given to you without the consequences of paying taxes; it's just not how the system works. Just because you were paid in stock doesn't mean the obligation to pay taxes (as if you had been paid in cash) was somehow forgiven.
So kudo's for you for donating the shares you own! You just can't donate what you don't own!
so if you sell the shares and then donate the proceeds, any capital gain (and therefore tax) can be wiped out by the donation (but be careful! you need to be itemizing your deductions for this to work!). Alternatively, transfer the ownership of the shares to the charity and let them sell them.
does that help?
