TurboTax uses Average Sale Price if you indicate that the stock was inherited. If not, Comparative Sale Price is used as per IRS regulations. I agree this is confusing when entering your stock donation and choosing 'Average Sale Price' and seeing the default to 'Comparative Sales'.
Key Reasons for Using Comparative Sales Prices:
- IRS Compliance: The IRS requires that stocks, bonds, and donated items be valued at their Fair Market Value (FMV) on the applicable date, which often translates to using specific, comparative selling prices rather than averages.
- Accuracy in Reporting: For non-cash charitable contributions (Form 8283), for instance, the valuation is based on what a willing buyer would pay for a similar item (comparative sales/FMV), not the average price of all items sold, to ensure precise, individualized valuation.
- Transaction-Level Detail: TurboTax has adopted stricter, transaction-level reporting on forms like Form 8949 to align with the IRS's emphasis on tracking individual, accurate transactions rather than averaged data, which is considered a more accurate representation of the taxable event.
@phstephan
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