Why does Turbotax need to know the cost basis and purchase date of inherited stock that i have donated to a charity?

Forum|Forum|7 years ago
June 1, 2019
8 replies
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I inherited some stock and do not know when it was purchased or what the purchase price was.

I donated the stock to a charity. Why does TurboTax ask me what the purchase price was and the date it was bought?

That shouldn't matter since I gave it all away to charity, right?

This has stopped me dead in my tracks on preparing my taxes for 2018.

Thanks in advance!

TurboTax Premier Windows

Best answer by TomYoung

Typically when people are giving away (usually appreciated) stock they are giving stock that they purchased and usually the stock is held long-term. But of course you could be giving away (foolishly) stock that has either gone down in value or stock that you purchased a month before the gift. The tax rules as to the amount of allowable charitable contribution deductions differ depending on the situation and that's why TurboTax is asking those questions.

When you enter the donation there's a page that comes up that asks how you acquired the stock; you click "inherited". (First picture below.) You get a page of instruction that outlines how you're supposed to proceed in this situation. (Second picture below.)

When you tell TurboTax you donated publicly traded stock (assumed), you then enter the description of the stock, the value on the date of the gift and select "average share price". You'll come to the next page where it asks for the "purchase" information. Enter the value on the DoD, enter "various" in the date acquired box and select "inheritance" as the method of acquisition. On the page after that it really doesn't matter how you answer that question but I'd answer "No" simply because it lops one page off the interview. (Answer "Yes" and then it asks about if the donation will be used in the charity's function, which is pretty irrelevant.)

You'll end up with a deduction that's the value of the donation on the date you made the donation.

As to "why" TurboTax does this I'd say that the interview in this area isn't particularly well developed for the situation.

Tom Young

T

TomYoung

Answer

Alumni - Champ

Typically when people are giving away (usually appreciated) stock they are giving stock that they purchased and usually the stock is held long-term. But of course you could be giving away (foolishly) stock that has either gone down in value or stock that you purchased a month before the gift. The tax rules as to the amount of allowable charitable contribution deductions differ depending on the situation and that's why TurboTax is asking those questions.

When you enter the donation there's a page that comes up that asks how you acquired the stock; you click "inherited". (First picture below.) You get a page of instruction that outlines how you're supposed to proceed in this situation. (Second picture below.)

When you tell TurboTax you donated publicly traded stock (assumed), you then enter the description of the stock, the value on the date of the gift and select "average share price". You'll come to the next page where it asks for the "purchase" information. Enter the value on the DoD, enter "various" in the date acquired box and select "inheritance" as the method of acquisition. On the page after that it really doesn't matter how you answer that question but I'd answer "No" simply because it lops one page off the interview. (Answer "Yes" and then it asks about if the donation will be used in the charity's function, which is pretty irrelevant.)

You'll end up with a deduction that's the value of the donation on the date you made the donation.

As to "why" TurboTax does this I'd say that the interview in this area isn't particularly well developed for the situation.

Tom Young

R

RG1Author

Level 2

Thanks Tom.

I had followed down the path that you'd described above and then got stopped by the purchase price question. In my case I don't know when it was purchased or what the purchase price was because it was something that I inherited and I have no way of getting that information.

From what I can gather, the deduction IS the value of the donation when I donated it and I don't think the cost basis would matter, would it?

Sorry if I'm being obtuse here; tax law isn't my strong suit.