Help with Cost Basis Question - Necessary to know for DAF Donation?

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TallBoy29er
Posts: 1030
Joined: Thu Jul 18, 2013 9:06 pm

Help with Cost Basis Question - Necessary to know for DAF Donation?

Post by TallBoy29er »

I am opening up a DAF at Schwab, and am going to contribute my most appreciated securities.

My securities reside at TDA, and I am using their Gainskeeper tool. I have one lot of 125 shares of QQQ, with no purchase date, and the tool is reflecting an adjusted cost per share of $0.00. The current value is $35,233. These were the days before I had a clue, so I didn't keep good records.

Questions:
  • Do I even need to know the cost basis of this lot if I am donating to my DAF? I believe the IRS requires this.
  • If yes to the first question, as I don't know the basis, can I use $0.00?
  • If I can't use $0.00 as the basis, do I just need to hold on to these til I die and let my heirs get a stepped up basis? :?
Gill
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Location: Florida

Re: Help with Cost Basis Question - Necessary to know for DAF Donation?

Post by Gill »

You're fine. Make the gift and report the holding as long term with zero basis. No need to dig it up or even estimate it as long as you know that is the holding you wish to give to the DAF.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
Topic Author
TallBoy29er
Posts: 1030
Joined: Thu Jul 18, 2013 9:06 pm

Re: Help with Cost Basis Question - Necessary to know for DAF Donation?

Post by TallBoy29er »

Gill wrote: Sun Aug 23, 2020 9:26 am You're fine. Make the gift and report the holding as long term with zero basis. No need to dig it up or even estimate it as long as you know that is the holding you wish to give to the DAF.
Gill
Always appreciate your posts. Thanks for the help, Gill.
increment
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Joined: Tue May 15, 2018 2:20 pm

Re: Help with Cost Basis Question - Necessary to know for DAF Donation?

Post by increment »

Gill wrote: Sun Aug 23, 2020 9:26 am Make the gift and report the holding as long term with zero basis.
Possibly you will not have to report anything for the basis. The Form 8283 instructions for Part I Column (g) "Donor's cost or adjusted basis" say, "Do not complete this column for publicly traded securities held more than 12 months, unless you elect to limit your deduction cost basis."
senex
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Joined: Wed Dec 13, 2017 4:38 pm

Re: Help with Cost Basis Question - Necessary to know for DAF Donation?

Post by senex »

Agree with everything above, and adding a little color:

1) As increment said, IRS instructions say that the basis is not required for long term shares

2) In practice, I've found that TurboTax asks for the basis & prints it on the form, even though doing so is not required

3) Either way, it is not used in any computations (for shares held 1+ year), and thus, as Gill said, your tax computation is identical whether you write 0, an estimate, or the actual value.

The reason IRS requires basis for short term shares is that your deduction is limited to min(basis, fair-value-on-date-of-donation). For long-term shares, they always use fair-value-on-date-of-donation.
GMT-8
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Joined: Fri Mar 26, 2010 5:11 pm

Re: Help with Cost Basis Question - Necessary to know for DAF Donation?

Post by GMT-8 »

I‘be been giving shares for about 15 years and never reported anything on cost basis. My tax man must be reporting zero.

GMT
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