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
