Question

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.

Forum|Forum|6 years ago
June 6, 2019
4 replies
0 views

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

TurboTax Premier Online

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.

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L

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.

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T

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:

Be sure you qualify for Itemized deductions.
Go to Deductions & Credits
Scroll down to Charitable Donations
Select Donations to Charity in 2019
Let's start over and do Add Another Charity
Enter who you donated to and then select Stock
Click None of the Above
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.

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N

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.

D

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

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Nat2

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.)

D

dkvonr

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

M

Mike9241

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.