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.

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.

 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?  

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

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! 

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.

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?

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

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.

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.  

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

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.

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

Seems to be OK

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.

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

It appears that the only caveat is if the stock was held for less than a year - then it is treated as a short term cap gain and you can only claim your basis.

 I agree it is a problem/glitch with Turbo for constraining how to enter donations of appreciated stock held longer than a year without needing to enter a basis and specific dates (in our case it would be many dates over a few decades.)

If in fact the holding period were in excess of one year as entered above the Cost Basis inquiry in the program, Turbotax should fix their program so that the Cost Basis is not required, or at least be tell the preparer that the Cost Basis is not required. Otherwise, one has to hunt around to try and find it when it is not needed.

I donated stock from an advised fund, so there are over 30 different stocks involved. The donor advised fund doesn't being to include all that info. Turbo tax is actually harder than filling out all the forms by hand. It does the same thing with requiring me to list each and every time I give money to a charity. this would result in a couple hundred entries. I'll never use Turbo Tax again.

Hi,

NO ONE appears to have answered this question satisfactorily.  The fact of the matter is that, according to IRS rules, Full Market Value is deductible for stocks donated with only Long-Term Gains and there should be NO NEED to enter Cost Basis for these donations.  We are considering such donations for the first time this year (2022 donations to a Donor-Directed Fund, to be distributed at a later time) so we have not done this before. and would appreciate a straight answer.  As best as I can figure out from this thread, TurboTax INCORRECTLY requires Cost Basis to be entered for donated stocks with ONLY Long-Term gains.

Can someone who really understands this confirm that TurboTax treats these donations correction OR that TurbTax intends to correct this issue?|

Thanks,
dkvonr

about the only reason is that you can elect to deduct only the cost basis of the security.

instructions from form 8283

Column (g). Do not complete this column for publicly
traded securities (PTS) held more than 12 months, unless you
elect to limit your deduction cost basis. See section
170(b)(1)(C)(iii). Keep records on cost or other basis.

capital gain property contributed is limited to 30% of AGI. this limitation does not apply if cost basis is used.

If you've held the stock for less than a year and the stock has depreciated in value, do you get credit for the cost basis or current market value of the donation?

@JulietteMount - it's the market value - the IRS is not going to give you a benefit on stocks that depreciated.

Example:

I paid 1 million dollars for a stock.   

it depreciated all the way to 1 dollar.

the IRS is not going to let me give $1 to a charity and take a $1 million deduction for my personal investment decision.   But the IRS will let me take a $1 deduction for the donation of the stock. 

@JulietteMount 

donations of stock held 1 year or less are treated as ordinary income property so the tax deduction is the lower of cost or FMV 

I'm having the exact same issue for my 2022 returns. Turbotax is still incorrect at requiring a cost basis to be reported. I donated multiple stocks which I held all >1 year, and I do not even have the cost basis to report. I can use the back button to get out of the module, but Turbotax won't let me submit electronically as it considers the form incomplete. It also won't allow me to manually fill out the form, or write N/A, requiring only numbers input. 

To enter a cost basis, try entering the number 0 and see if that will clear the error.

@bfriesen01