Donate appreciated stock to charity

Unknown

I plan to donate appreciated stock to a charity, A community Foundation. I will then create a "charitable checking fund" where I can write checks to whatever charities I want to. By transferring the appreciated stock, I get credit for the entire charitable deduction without having to deal with Capital Gains. I will maintain control over the funds until I make donations to approved charities.

Question: How do I handle this transfer of assets and then keep track of the "charitable checking fund" as a conventional checking account in Quicken?

K.O. (Win-Premier)

It's been awhile since I donated appreciated stock but if memory serves a couple of points.

Unless the tax code has changed you must donate the stock to the charity and the amount of your contribution is based on the average of the high price and low price of the stock on the date they sell it.  The charity will provide you a letter with the sale date and proceeds.  Thus you cannot sell the stock yourself, move the funds to a checking account, and then give the proceeds to a charity.

When I did this I just kept the stock in my Quicken account.  When the charity told me they sold the stock I would Remove the corresponding shares so as not to have them appear on the capital gains report.  There is no way in Quicken to log the amount for charitable contribution that I am aware of.

Unknown

I have just such a charitable trust account.  For Quicken I set it up as a banking account.  I just set up the amount the sale netted as the opening balance.  Do not use the amount the IRS allows you to deduct,  Use the actual dollar amount the broker credited you with.  Under Display options I clicked Keep this account separate.   I do not count this account as an asset.  I have given it away.   So it is not part  of my net worth.

You declare the full amount the IRS allows for the sale as a charitable deduction in the year of the sale.  (You probably know this already.)  How do I keep track of the amount of the deduction?  I add a memo to the "Removed Shares" line in the Brokerage account that the $ went to my Charitable account.  Your broker will send you a form stating the amount of the deduction.  I  keep that piece of paper with my income tax records.

As I spend money from the charitable account I count the amount given as Not Budget for a category.  If I add more to the account I use Not Income as the category.  I have added both Not Budget and Not Income to my list of categories.
 
This has worked well for me for about 10 years.

Vetta

The reply from Kevin Osborn is correct. You must give the stock to the charity and allow them to sell it. Any sale by you will generate cap gains on your taxes no matter what you do with the funds.

NotACPA

Steve,
Here's the transactions that you'll need to record in Q for both the donation and the step-up in value from your purchase price to the value of the donation:  https://getsatisfaction.com/quickencommunity/topics/how-do-i-record-a-charitable-contribution-in-an-...

q_lurker

Steve, you have brought in a different aspect not commonly touched on here. The link NotACPA provided included my common recommendation for charitable security donations. That is the place to begin.



You and Kayo have identified another aspect. I am not a tax guru or professional so take the following as FWIW. When you gift the shares to the Community Foundation, that is when you get the tax donation. That is when you follow the sequence I and others outlined elsewhere. Usually, for me, that would be the end of it.



But you and Kayo seem to want to continue to control and monitor the community foundation's use of those funds. KAyo's method of using a "separate" account, not in your net worth accounting for that purpose would seem to make sense to me. Whether that should be a checking account or an investment account trading shares and getting dividends, etc. is not something I can advise on. Either account type might be possible; you'll need to experiment to figure out if something fits your needs better.



God luck.

Unknown

No.  I transferred the Shares to Fidelity Charitable ...  They sold the
stock.  They told me what the value for the IRS was and they transferred
the $ amount the sale actually brought into my Fidelity Charitable
account.  Fidelity transferred the $ I wanted to the original charity
selected.  Once I did that the value of my Fidelity Charitable is no
longer a
part of my net worth and all I can do is transfer $ to another
established charity. So there the $ sit until I tell them to give some
money to a known, registered charity (Buddy Dogs, for example)

I assume that Steve, his broker and the foundation he wants his original donation to go to can work all this out.

My broker, Fidelity  had a way to do all of this transparently.

q_lurker

Kayo said:

No.  I transferred the Shares to Fidelity Charitable ...  They sold the
stock.  They told me what the value for the IRS was and they transferred
the $ amount the sale actually brought into my Fidelity Charitable
account.  Fidelity transferred the $ I wanted to the original charity
selected.  Once I did that the value of my Fidelity Charitable is no
longer a
part of my net worth and all I can do is transfer $ to another
established charity. So there the $ sit until I tell them to give some
money to a known, registered charity (Buddy Dogs, for example)

I assume that Steve, his broker and the foundation he wants his original donation to go to can work all this out.

My broker, Fidelity  had a way to do all of this transparently.

That is a little different than my prior understanding, but not a lot. Your donation to Fidelity Charitable took it out of your hands and gave you the immediate tax deduction, just like such gifts given any charitable organization. The distinction I am seeing in these cases is the desire and ability to subsequently direct the receiving organization (Fidelity Charitable in this case) to send some assets one direction (such as Buddy Dogs) and some another. That is where your method of using the "separate"account is valuable. For your case and perhaps for Steve's case, a separate checking account is quite adequate.


Some of those community foundation type of organizations will allow the original donor some leeway on the investment decisions while those contributed assets are being doled out. In such cases, the Quicken user might choose to have that separate account as an investment account rather than as a checking account.

Unknown

K.O. (Win-Premier) said:

It's been awhile since I donated appreciated stock but if memory serves a couple of points.

Unless the tax code has changed you must donate the stock to the charity and the amount of your contribution is based on the average of the high price and low price of the stock on the date they sell it.  The charity will provide you a letter with the sale date and proceeds.  Thus you cannot sell the stock yourself, move the funds to a checking account, and then give the proceeds to a charity.

When I did this I just kept the stock in my Quicken account.  When the charity told me they sold the stock I would Remove the corresponding shares so as not to have them appear on the capital gains report.  There is no way in Quicken to log the amount for charitable contribution that I am aware of.

Minor quibble: the donation value is based on the average of the high and low trading price of the stock on the date of transfer between your account and the charity's account.  When you give up "control" of your gift.