topic Contributions from a mutual fund to a donor advised fund require a cost basis in Deductions & credits

Contributions from a mutual fund to a donor advised fund require a cost basis

dremy — Sat, 12 Feb 2022 18:18:04 GMT

Do contributions held for over a year in a mutual fund to donor advised fund (DAF) require a cost basis?

I donated more than $5000 from a Vanguard fund to a Vanguard Charitable Fund. These funds were held in the account for more than a year. Turbo Tax 21 is asking for the date of donation, the number of shares, and the value at the date of donation. All of this information is provided by Vanguard Charitable. Turbo Tax 21 goes on to ask for the date acquired and the cost basis. I plan to put "various" for data acquired. I am not sure how to answer the question about the cost basis.

This problem was reported last year and apparently was not resolved.

Re: Contributions from a mutual fund to a donor advised fund require a cost basis

PatriciaV — Sun, 13 Feb 2022 17:11:43 GMT

Yes, contributions to a donor-advised fund require cost basis information to determine the value of the donation. If your basis is less than the fair market value of stock, then the basis amount will be used for the deduction. If your fair market value of the stock is less than the basis, then the fair market value is used.

To determine the amount to use for cost basis, look for the tax basis on your monthly brokerage account (not Charitable) statement. In the month you funded your donor advised fund, the statement should show the shares of each fund donated. You may need to go to the previous month's statement to get the total cost basis for all of your shares so you can calculate an average cost basis per share. Multiply the cost per share times the number of shares donated to get the total cost basis.

If you are not sure what the basis is of the stock, enter a "0" and whatever value the stock is presently is what will be used as the deductible donation amount as it is the Fair Market Value of the stock at the present time.

Re: Contributions from a mutual fund to a donor advised fund require a cost basis

Hal_Al — Sun, 13 Feb 2022 17:25:26 GMT

Yes, you need to provide the cost basis, just because the IRS says so. They don't do anything with it. It's mostly for statistical purposes (they want to know how much this tax saving gimmick is giving away). If you can't find the basis, a guess is close enough.

There is no problem in TurboTax. You are expected to know your basis. You problem is with Vanguard, not making it easy for you to find.

Re: Contributions from a mutual fund to a donor advised fund require a cost basis

dremy — Tue, 15 Feb 2022 22:13:17 GMT

Thanks for your response. Since I made the contribution from a mutual fund I checked the historical data for the opening price of a share on the day of the contribution to the DAF. I will multiply the number of shares by the opening and closing share price to calculate the cost basis and FMV. It turns out the share price dropped $.50 that day so the fair market value will be slightly less the cost basis.