Method used to value common stock donations

Forum|Forum|1 year ago
February 11, 2025
5 replies
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Why does TurboTax show the valuation method for common stock donations made from purchased securities as "Comparable Sales", but common stock donations from inherited securities as "average price"?

AmyC

Level 15

Tax rules. Purchased stock is based on comparable sales or FMV. Inherited securities have a step up basis usually. The average price method is to help simplify things.

We comply with IRS rules regarding how to determine the fair market value of donated securities based on their acquisition method (purchase vs. inheritance).

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JCS52Author

Level 2

Thank you for responding, AmyC. I didn't word my question very well. As you know, Treasury Regulation 20-2031.2 outlines how donated securities are to be valued in determining the "fair value" deduction used on the tax return. In the case of common stock, the deduction is the average of the high and low trading price on the date of the donation...regardless of how the security was acquired...purchased or inherited.

So, my question is why TurboTax shows a different valuation method on Form 8283 (Noncash Charitable Contributions) for purchased and inherited common stock. For example, TurboTax uses the phrase "Comparative Sales" for donated purchased common stock and "Average Share" for donated inherited common stock. Of these two descriptions it seems to me that "Average Share" most closely describes the proper method.

Please advise. Many thanks.

DavidD66

Level 15

TurboTax provides a list of the choices for all types of donated non-cash property for the donation of inherited stock, which includes both Average Share and Comparative Sales. For stock you donated that wasn't inherited, TurboTax does not ask a method, just "Value on Date of Donation".

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