I donated(transferred ownership) a large number of shares of stock to charity(Donor Advised Fund/DAF), why is turbotax asking for the cost basis?

[AlanT222 · Accepted solution]

If you've held the stock for more at least one year, 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.

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

[tbedenk]

Does the short term rule apply to stock I inherited?  It was in my possession less than a year before I transferred it into the donor advised fund.

[DMarkM1]

Inherited stock is considered long-term no matter what length of time the stock was held.  Here is link to Publication 544 for more information.  

[ksgilkey1]

This does not answer the question.  For stock held long term, why is Turbo Tax asking for cost basis?  I hesitate to make up a number but don't have the information.  Can Turbo Tax change and allow N/A?

[DaveF1006]

The reason why it is asking the basis is that 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.  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. 

[KumarM]

Dave - I am using Turbox Tax Premier to enter an long-term appreciated stock donation to a donor advised fund.  It is not using the FMV although the cost basis is lower than the FMV.  I have selected "Various" and also a date older than 1 year for Date Acquired.  It is not working like the way you're explaining.  I know my cost basis and wondering why I should enter 0 or FMV as cost basis to make the Turbo Tax program work.  Please address this.

[DMarkM1]

You are correct if the stock was held for more than 1 year (various) then the FMV will be used.  If the stock was held for less than 1 year then the lower of cost or FMV will be used.  

Delete the donation and complete the topic interview to be sure it cleared.  Then go back to enter the donation again. Enter FMV at time of donation in its box and then actual cost in the cost box.  If it still insist on taking cost for the long term holding then enter the FMV in the cost box and the FMV box.