Donating Stock - A little help, please.

[Koolau]

I need some advice. Since it's primarily "tax" advice, I understand it's still on me to get professional advice before I move. But before I ask my tax guy, I want to pick the brains here to see if I am even close.

I plan to donate some stock to a qualified charity (IOW if it were cash, it would be a deductible contribution so the stock should also be a deductible contribution.) I could sell the stock myself and then donate the proceeds but please help me evaluate my thinking:

I have lost the basis of the stock. Long story short, I owned it for a long time and lost a bunch of quarterly statements indicating further purchases due to dividend repurchase. I called the brokerage company and they could not supply me directly with a basis for the stock. Nor could they recreate the dividend repurchases far enough back to establish basis. Also, the basis has to be very near what I paid over the years.

So my main reason for donating stock is to avoid worrying about establishing basis. The donation amount vs what I paid for the stock is nearly the same at this point (sounds like a good reason to get rid of this particular stock - it's been a loser that I now want to dump.)

Can anyone indicate if this sounds like a plan? Can I simply donate the stock and claim a charitable deduction equal to the final settlement by the charity? Do I need to worry about basis if i do it this way?

The good folks here always seem up on such issues while I've never been good with (especially) individual stocks. Thanks for any help you can give. Again, I understand this isn't official tax advice - just looking for "proof of concept", so YMMV. Thanks.

 

[JoeWras]

Sounds like a plan to me. One key here is if it is over 12 months old (which you can prove, right?) then even better.

Read up on form 8283. Instructions for Form 8283 (12/2014)

To your benefit is the following:

Column (e). Enter the approximate date you acquired the property. If it was created, produced, or manufactured by or for you, enter the date it was substantially completed.
If you are donating a group of similar items and you acquired the items on various dates (but have held all the items for at least 12 months), you can enter “Various.”
Column (f). State how you acquired the property. This could be by purchase, gift, inheritance, or exchange.
Column (g). Do not complete this column for property held at least 12 months or publicly traded securities. Keep records on cost or other basis.

Column (g) is the "Donor's cost basis". So, again, good news for you.

You know, I never paid much attention to this form since Turbo Tax always asks for details, including the original basis.

 

[audreyh1]

I think if you donate the stock (held long term) to a charity, the cost basis doesn't matter since you don't have to report any gain as it is not counted as part of your AGI.

And the "value" computed based on the average of the high and low price for the stock on that day, is your charitable deduction.

 

[Koolau]

Sounds like a plan to me. One key here is if it is over 12 months old (which you can prove, right?) then even better.

Thanks JoeWras for the quick response. I've had the stock longer than a year and can prove it with documentation. I'll mention Form 8283 to my tax guy and look for either "bright eyes" or an inquisitive look. I've never used him for anything too complex so far. Guess this will be the test. Thanks again for the info.

 

[Koolau]

I think if you donate the stock (held long term) to a charity, the cost basis doesn't matter since you don't have to report any gain as it is not counted as part of your AGI.

And the "value" computed based on the average of the high and low price for the stock on that day, is your charitable deduction.

That was substantially my understanding, but I've never done it. Also, it seems there are always "gotchas" to look out for. I'll have to check into documentation of the "high/low" average. I will be working with the charity's broker, so I am assuming they will be able to provide that info as well.

Thanks!

 

[audreyh1]

I have done it. Having a donor advised fund linked to my brokerage account makes donation of appreciated securities easy.

The high/low thing has to do with the day you donate it AFAIK - nothing to do with what the charity gets for it or when they sell it.

 

[45th Birthday]

The high/low thing has to do with the day you donate it AFAIK - nothing to do with what the charity gets for it or when they sell it.

That is correct. The main charity I'm heavily involved with sells the stock the day it receives it (usually one business day after the high/low average) and books the difference as a gain or loss. Usually just a few dollars. Theoretically, a charity might hold onto the stock if it is a large amount and the donor has asked that it not all be dumped on the market at once.

 

[pb4uski]

Yes, you get a deduction for the value of the stock on the date it is donated so the fact that you don't know the basis isn't relevant to the tax treatment.

 

[JoeWras]

Thanks JoeWras for the quick response. I've had the stock longer than a year and can prove it with documentation. I'll mention Form 8283 to my tax guy and look for either "bright eyes" or an inquisitive look. I've never used him for anything too complex so far. Guess this will be the test. Thanks again for the info.

This is so common that it should be trivial for your tax guy. If he struggles, get a different tax guy. I'm serious.

 

[MBAustin]

This is so common that it should be trivial for your tax guy. If he struggles, get a different tax guy. I'm serious.

+1

The only issue I've had in doing this is getting Merrill Lynch to actually let me make the donation - they require a Medallion Signature Guarantee which is now nearly impossible to get. If you run into this, search the forums for "Medallion" and find some tips - it's come up here several times in the past year or two.

 

[Koolau]

+1

The only issue I've had in doing this is getting Merrill Lynch to actually let me make the donation - they require a Medallion Signature Guarantee which is now nearly impossible to get. If you run into this, search the forums for "Medallion" and find some tips - it's come up here several times in the past year or two.

Thanks for the tip. I'm hoping there will be no serious issues as the shares are in Vanguard Brokerage acct. Also, the receiving charity does this quite often and has their own brokerage person who handles all of the transactions. I'll contact her first and ask how to deal with Vang. I might even be able to do it over the net, but I'm pretty sure I'll also call a human at Vang. to hold my hand.

THANKS TO ALL FOR YOUR CONTRIBUTIONS. I knew this was the place to start. (All of us are smarter than one of us - I forget who said that and YMMV.)