What the need for Cost Basis information when reporting Stock Donations to Charities? The entire market value of the security on the day of donation is deductible.

[manug_in]

I used Fidelity Charitable Account and they don't provide the Cost Basis for donated stocks.

[IsabellaG]

If you've held the stock for more at least one year, you are correct, and you will be able to deduct the Fair Market Value of the donation.

 However, if you have held the stock for less than one year, it is short term capital gains property, and you can only claim your basis as a deduction. See page 11 of this link: https://www.irs.gov/pub/irs-pdf/p526.pdf.

As long as you've held the property for one year, the amount that you enter for the basis will not affect your deduction.

[lynne29]

 When I enter an amount for  cost basis on Turbo tax for donated stocks as opposed to leaving it blank,  the amount of my tax refund changes dramatically.

If the cost basis doesn't matter, why is this happening?  

[DaveF1006]

Cost basis does matter. Your refund should increase if you enter the FMV of your donated stocks correctly.

[themanfromwestchester]

Hi Dave, I apologize, I am trying to understand your statement above that cost basis of a stock donated to charity matters. In the user case above, they are donating a stock held more than one year to a valid IRS charity. 

Here how turbo tax works with this situation: TT asks for the donated value, the date given, the date the stock was purchased and the cost basis. If you make the donated value and the cost value the same, you get a much bigger refund. If you make the cost basis at least one dollar lower than the donated value you get a much lower Federal refund. MY understanding is that the cost basis of a stock donated to charity does not matter and TT should not be giving different refund amounts in these two situations. Do you agree? or disagree? thank-you! 

[JohnB5677]

You are correct that the cost basis does not affect the amount of the donation.  The amount donated is the fair market value on the day of the donation.  I have posted this and di get accurate results regardless of the cost basis that I entered.  Here are the steps that I followed:

1. Be sure you qualify for Itemized deductions.
2. Go to Deductions & Credits
3. Scroll down to Charitable Donations
4. Select Donations to Charity in 2019
5. Let's start over and do Add Another Charity
6. Enter who you donated to and then select Stock
7. Click None of the Above
8. Enter dates and values.  Date of Donation is in 2019, and Date Acquired should be over a year before.

At this point the Cost Basis should not effect your refund.

[lynne29]

This doesn't work in Premier.  Is there a glitch in Turbo Tax if the refund amount changes when Cost basis  less than the donated amount is entered?

[JohnB5677]

I noticed that if it was a short term sale it did reduce the refund.  If it were long term it would not.

Per the IRS:  For purposes of figuring your charitable contribution, capital assets also include certain real property and depreciable property used in your trade or business and, generally, held more than 1 year. 

See Capital Gain Property / Capital assets: Charitable Stock Donation

[DBergie]

I am using TT 2019 to test out a charitable donation of stock that is a LT holding.

I am seeing the same results where the cost basis make a big difference in the amount of my refund.

The one thing is the donation is moving me from standard to itemized deductions, but still do not see why the cost basis is lowering my return amount.

[angelsf1]

I have the same problem in Premier.   I left the Cost Basis blank.  If you enter zero the deduction isn't properly calculated and refund changes significantly.  After leaving Cost Basis blank,  "Done with this Donation" will not pass you on, but if you choose "back" you can keep the record and the adjusted deduction amount.  

[VictoriaD75]

The cost/adjusted basis is the amount you originally paid for the donated item. It should not be listed as $0 or left blank.

If the item was inherited, the cost basis is the Fair Market Value (FMV) of the item on the date the person who you inherited from died.

Refer to IRS Publication 561, Determining the Value of Donated Property

[DBergie]

Can someone (an expert) explain why TurboTax lowers the amount of my refund when I enter the cost basis as other than $0?  The entire market value should be deductible as a charitable donation. Cost basis should make to difference in the value of the donation (deduction) but it certainly does in TurboTax.

[angelsf1]

I had same issue, left cost blank and used "BACK" to get out of the dead end TurboTax sets up.  

Seems to be OK

[Nat2]

Fidelity Charitable generates their own 8283 for clients to use.  They leave blank 1) Date acquired 2) How acquired 3) Donor's Cost or adjusted basis.  They only show A) Date of Contribution, B) Fair Market Value, and C) for Method used to determine FMV they write: Treasury Regulation #20.2031-2.  Turbo will NOT allow these to be blank, even though the IRS only requires the Date and FMV for donated stocks.  It doesn't appear Turbo even allows one to do this manually.  We are planning to donate stock that my wife bought in bits years ago, starting in the early 80's for 30 or so years.  She no longer has most of those records, and if we donate them we really don't need them.  Not sure how to proceed.

[DBergie]

I cannot figure this out. Everything I see indicates the entire value of the donated stock is deductible as a charitable donation, but Turbo Tax seems to think otherwise. I see it is as a flaw in the program. If it is not fixed or someone cannot explain why the cost of the stock is not deductible, I plan to put in zero for cost to get around the problem