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Turbo Tax Surprise with Stock Gift
03-26-2016, 08:15 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Jun 2004
Location: W Wash
Posts: 1,644
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Turbo Tax Surprise with Stock Gift
Perhaps I am the only person to experience this "gotcha" but thought I pass it along as a "watch out" for those still finishing their taxes
In TTax when you complete the stock gift questions, there is a dialogue box that asks you to enter the date of purchase and basis of your stock being gifted.
I originally answered "various" as the lots were all long term but of varying purchase dates. BAD IDEA. If TTax does not know it is long term (needs a date entered that is clearly LT), you only get a deduction credit for your purchase basis.
Apparently, only long term positions are eligible for receiving FMV credit to the charity. TTax "help" explains it as only LT gains received special treatment and all short-term would have been treated as ordinary income so only original cost were deductible.
Personally I never heard of this change so it was an eye opener.
Nwsteve
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03-26-2016, 08:49 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,007
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Yes, only long term appreciated stock is eligible for special treatment when donated to charity.
__________________
Retired since summer 1999.
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03-26-2016, 10:28 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,203
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Can you not enter a date VAR-L? I remember doing that in previous years for stock sales and it put it in LT gain...
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03-27-2016, 06:26 AM
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#4
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Recycles dryer sheets
Join Date: Jun 2010
Location: Southwest Florida
Posts: 470
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That's been the law since I studied tax law 50 years ago.😄
Bruce
Sent from my iPad using Early Retirement Forum
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03-27-2016, 09:27 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Jun 2004
Location: W Wash
Posts: 1,644
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[QUOTE=MBMiner;1712730]That's been the law since I studied tax law 50 years ago.😄
Bruce /QUOTE]
Well, guess not having studied tax law formally, I guess I missed that chapter ;-). But then again, I only started giving stock relatively recently.
Good news is that my stock donations have all been long-term, so no need to do any amended returns for that gap in knowledge. Doing the TT questionnaire, just made the rule obvious.
Thanks to all for the perspective
Nwsteve
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03-27-2016, 03:10 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,007
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A Fidelity Charitable write up on it made the long-term requirement clear.
http://www.fidelitycharitable.org/gi...curities.shtml
__________________
Retired since summer 1999.
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03-27-2016, 04:28 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Jun 2004
Location: W Wash
Posts: 1,644
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Quote:
Originally Posted by audreyh1
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Thanks for the link--very clear. The long term component as taxable term vs short term, just never registered in the brain as it related to a stock gift.
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03-27-2016, 07:22 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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My impression is that no one reads the IRS instructions anymore and especially not the IRS publications on tax matters. For instance, there is one on charitable contributions: https://www.irs.gov/pub/irs-pdf/p526.pdf
In the old days (pre-TurboTax, pre-TaxAct, pre-software), there was no way to do one's own tax return without reading these things. I guess software has made us less likely to know the rules. Some folks don't even look at their return before e-filing.
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