(FORTUNE Magazine) – Before the year ends, many Americans will make charitable contributions, secure in the knowledge that their generosity will be accompanied by the deep joy of reaping tax deductions that equal the gift. Those folk, according to a November Wall Street Journal story, may even include some Goldman Sachs executives taking advantage of a new waiver allowing them to give charities Goldman stock that they are otherwise not permitted to dispose of. Noting one benefit of giving away the shares, the story said, "Donors can get a tax deduction equal to the entire market value of their stock."

That's a lot of bunk. As any upper-income taxpayer who goes through the great learning experience of doing his or her own taxes knows, the tax law taketh away deductions after you reach a certain income level, which isn't really that high. Specifically, if you and your spouse together have adjusted gross income (that's the bottom line of page 1 of a 1040 tax form) of more than $126,600 in 1999 and itemize deductions--which most people at that income level would do--you will not get to deduct 100% of what you laid out for charity, taxes, and mortgage interest.

Instead, you will be subjected to a haircut, losing 3 cents of those deductions for each dollar that your income exceeds $126,600 (with one exception, noted below). You don't think that can add up? Let's say you're a Wall Streeter with 1999 adjusted gross income of $500,000 and expenses for property and state income taxes, mortgage interest, and charitable gifts of $100,000. Because your income exceeds the $126,600 trigger point by $373,400, you'll lose the ability to deduct 3% of that--or $11,202--and be taxed on that amount.

Ugh, you say. But wait: Suppose you have $500,000 in income, and also decide in 1999 to take a $2 million capital gain. Now your income of $2.5 million exceeds the $126,600 by $2,373,400. In that case, the deductions you lose (out of the $100,000 you started with) add up to $71,202!

You're close, though, to the end of your pain: The law, making its one exception, says that no matter how big your income, you can't lose more than 80% of the $100,000 in deductions.

Unsurprisingly, fundraisers for charities do not bustle around educating donors about the provision in the tax laws that gives haircuts to contributions. Still, says Matthew Hamill, a vice president of Independent Sector, a Washington, D.C., organization representing not-for-profits: "We'd like to see the provision removed if Congress revisits the subject." Since that's not in the offing, you'll just have to give with a little more generosity and a little less joy about the effect on your taxes.

--Carol J. Loomis