After you have held stock for more than one year and its price has risen, at the time of the donation you get a tax deduction equal to the fair market value of the stock (i.e. not your lower purchase price, technically known as the cost basis). I received stocks as gifts decades ago from my grandfather, and have transferred them to a donor advised fund (i.e. a charitable donation). Turbo Tax keeps asking me for a purchase price and date acquired, neither of which I have (my grandfather is dead and I have no way to get those records), but neither of which I should need.
I entered these in the “Items” section of the donation, entered the date donated, selected “Publicly traded stock,” gave a description and value and selected “Average share price.” Now here’s the interesting bit:
If I should be able to deduct the fair market value of the stock, I figured I’d try something on the next question. Under purchase price I entered 0, under date “Various” (which is true), and how acquired is Gift. Lo and behold! the next question is “Did you own this more than a year?” which is the critical question for determining if I should get a deduction for the fair market value. This is what the folks at Schwab Charitable said it should be, this is what Forbes said it should be, and it makes me wonder why Turbo Tax doesn’t pose the “...more than one year” question first and save folks the trouble of calculating a cost basis that (I would think) doesn’t matter.
The next page says “[The item] appreciated in value. In order for you to be able to take the appreciated value of your donated item as a deduction, use by the charity must be associated with the function of the charity... Will your donation be used in direct association with the charity's function?” Well, Schwab Charitable is a donor advised fund, so I’d say so.
Maybe this solves it? I’m not a CPA, so I’d like to know from others: Does this work?
Your deduction seems to be correct based on your description. I believe TurboTax asks you questions regarding the basis in the case that the charity does not use the donation for it's normal function, in which case you could only deduct your cost basis.
Thanks for this! Makes me feel better.
Turns out Schwab Charitable has a section on their site that has the cost basis and open date of each stock. So I can use it to fill out everything Turbo Tax is asking for. It will be more work than doing what I just did, and will most likely have no effect on the outcome, but it feels safer and more thorough.
Thanks again!