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How do I account for a stock transfer to charity?

harry askenazi

I transferred shares of a mutual fund to a charity as a donation.
In Quicken, I chose "transfer of shares without affecting cash value"

1) Why should it not affect cash value? I should be able to choose transfer but it should affect the cash value
2) When I choose the lot that I "sold", it correctly calculates the cost basis of those shares. But This will show up as a gains in my account, whereas because it was a donation I do not have reportable gains. Given that, what is the correct way to add this transfer to my Quicken register?

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Accepted answers

q_lurker

In Quicken-Windows I use a 4-step sequence:

Remove Shares - specifying the specific lot(s) I have chosen to donate noting the specific acquisition date(s). This takes the shares out at their basis thus no cap gains determined. The removal will show up in the Capital Gains report though.
Add Shares - adding back in those same shares with their original acquisition dates. But I now assign their current fair market values as used to determine the value of the gift. For a mutual fund I would expect that to be the NAV on the date of the transfer. For a stock, there may be a different determination.
Sell Shares - selling those same shares for that same fair market value, thus, there is no capital gains from the sale. This produces cash in the account. This will also show up on the capital gains report likely as a long term gain of $0.
Withdraw - this transaction for the cash amount = gift amount payable to the charity and with the appropriate category designated to get it listed as a charitable donation.

HTH

q_lurker

I use the original date acquired, but that is not critical. Would only change the sale from ST to LT $0. I use gifting date as the transaction date for all 4 transactions.

All comments

q_lurker

In Quicken-Windows I use a 4-step sequence:

Remove Shares - specifying the specific lot(s) I have chosen to donate noting the specific acquisition date(s). This takes the shares out at their basis thus no cap gains determined. The removal will show up in the Capital Gains report though.
Add Shares - adding back in those same shares with their original acquisition dates. But I now assign their current fair market values as used to determine the value of the gift. For a mutual fund I would expect that to be the NAV on the date of the transfer. For a stock, there may be a different determination.
Sell Shares - selling those same shares for that same fair market value, thus, there is no capital gains from the sale. This produces cash in the account. This will also show up on the capital gains report likely as a long term gain of $0.
Withdraw - this transaction for the cash amount = gift amount payable to the charity and with the appropriate category designated to get it listed as a charitable donation.

HTH

harry askenazi

Thanks so much for that helpful and detailed reply. How to you account for the removal showing up in the cap gains report? Does that mean you will have an incorrect cap gains report?

EDIT: Nevermind, I get it. The removal itself will show up in cap gains report but there will be no cap gains impact because the removal is at the original basis

harry askenazi

One more question though:
When adding back the shares, there is a "transaction date" and a "date acquired" date. Do I enter the original acquisition date in both fields? Or do I enter that in the "Date acquired" field, and the date of transfer in the "transaction date" field? Or something else?

q_lurker

The cap gains report will show $0 for the gain/loss on both the remove and the sale so that total will be ok. But looking at total proceeds will be high by the amount of the removal and the sale. That total will not directly tie to the amount shown on the 1099B for that account.

harry askenazi

Thanks again for the quick reply. That all makes sense. The only remaining question I have is 2 posts above, about which dates to put in the "transaction date" and "date acquired" fields.

q_lurker

I use the original date acquired, but that is not critical. Would only change the sale from ST to LT $0. I use gifting date as the transaction date for all 4 transactions.