Jane was over 59 ½ and had retired a couple of years before and not taken any distributions from her 401k. On November 1, 2022, she took a total distribution from the 401k and elected to take 3000 shares of XYZ stock to a taxable brokerage account under NUA rules while rolling the remaining balance to her traditional IRA.
The plan administrator provided a statement of the 3000 shares distributed with a share price of $100 at the time of distribution, a market value of $300,000, a cost basis of $75,000, cost price of $25/share and unrealized appreciation of $225,000 and the rest of the account was rolled over to her IRA.
Jane’s account statement from the day before distribution has additional cost basis information about the 3000 shares with 1500 shares with cost basis of $30,000 ($20/share) and 1500 shares with cost basis of $45,000 ($30/share) (actual details included a wider range of values by dollar range but this illustrates the concept).
On December 15, 2022, Jane wants to donate 200 shares of XYZ stock now worth $110/share to her Donor Advised Fund. Because the $10 gain after distribution is short term, she is only able to deduct her cost basis (in this case the post NUA cost basis which was LT?) of $100/share. On the same day she sells 200 shares for living expenses.
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