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Author: FrancisdeR Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Donating appreciated stock Date: 2/11/2006 12:51 PM
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There are couple of charities to whom I donate 1% of my income every year. Now that I have some appreciated stocks in my taxable portfolio, I could donate appreciated stock instead of cash.

My question is about the mechanics. Do I ask my broker -- Fidelity -- to provide me with a certificate for x shares, which I can then mail to the charity. I assume there will be a fee for that.

Or do the big brokers all have a standard way to transfer shares from one person to another account, with all the big charities having an arrangement with every major broker?

If anyone has experience doing this, I would appreciate your views on the easiest and cheapest way to make the donation.

Thanks.

Francis
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Author: bmillz Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 83820 of 121061
Subject: Re: Donating appreciated stock Date: 2/11/2006 1:25 PM
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I key would be to ask each charity how they are able to take the stock donations, as it could potentially vary.

Where I used to work, stock donations where transfered from the givers brokerage account to our organizations brokerage account, where we immediately sold the stock.

Either way, it is ultimately your responsibility to know the value of the stock at the time of transfer from tax deduction purposes. This may be different from the amount the charity actually receives by the time it sells it.

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Author: NaggingFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 83821 of 121061
Subject: Re: Donating appreciated stock Date: 2/11/2006 1:26 PM
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Most brokers have a standard way to handle the donation of securities to the charity, and most charities are happy to provide you with you the information you need.

You can either call the broker or the charity. I seem to recall the list of fees at Scottrade includes how much it costs to transfer a stock to a charity, I suspect it would be similar at Fidelity.

- Megan


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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 83824 of 121061
Subject: Re: Donating appreciated stock Date: 2/11/2006 3:09 PM
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There are couple of charities to whom I donate 1% of my income every year. Now that I have some appreciated stocks in my taxable portfolio, I could donate appreciated stock instead of cash.

My question is about the mechanics. Do I ask my broker -- Fidelity -- to provide me with a certificate for x shares, which I can then mail to the charity. I assume there will be a fee for that.

Or do the big brokers all have a standard way to transfer shares from one person to another account, with all the big charities having an arrangement with every major broker?

If anyone has experience doing this, I would appreciate your views on the easiest and cheapest way to make the donation.


The easiest thing to do is contact the charity first. Ideally, if they have a brokerage account they will give you the account number and DTN of the brokerage (that's the broker's equivalent of the ABA number on the bottom of your checks). You can then notify your broker to transfer x share of ABC to the charity's account at [broker] [DTN] [account number].

The value of your contribution is the average of the high and low price on the date the stock leaves your account. You will have to record this as the charity won't. The charity will acknowledge receipt of the stock. You should attach a copy of any documentation you get from your broker (or the monthly statement showing the transfer) to the acknowledgement receipt in case the IRS ever questions it.

Ira


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Author: Renegadecj Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 83910 of 121061
Subject: Re: Donating appreciated stock Date: 2/13/2006 3:09 PM
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Make sure you contact the charity first, so they can be looking for the donation. I made the mistake once of being in a hurry and not calling them (it was a repeat donation from last year). It took them 3 days to figure out it was me. My brokerage firm didn't tell them who just gave them stock! You will need to write a letter, sign and notorize (sometimes medallion signature guarantee, depending on $$), then mail to your brokerage firm. They will make the transfer. I was told by our tax people that the deduction is the value the stock sold for, and every charity I have donated to sells it immediately. I have received notification from the charity's brokerage the value it was sold at.

IMHO it is by far the best way to donate to charity. You get the full deduction for the value, the charity gets the full value of the deduction, and the IRS gets to cry in their soup!

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 83911 of 121061
Subject: Re: Donating appreciated stock Date: 2/13/2006 3:28 PM
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Make sure you contact the charity first, so they can be looking for the donation. I made the mistake once of being in a hurry and not calling them (it was a repeat donation from last year). It took them 3 days to figure out it was me. My brokerage firm didn't tell them who just gave them stock! You will need to write a letter, sign and notorize (sometimes medallion signature guarantee, depending on $$), then mail to your brokerage firm. They will make the transfer. I was told by our tax people that the deduction is the value the stock sold for, and every charity I have donated to sells it immediately. I have received notification from the charity's brokerage the value it was sold at.

No, the donation value is the average of the high and low price on the day effective valuation date. This is usually the day it leaves your account. For more information see IRS Pub. 561, Determining the Value of Donated Property, www.irs.gov/pub/irs-pdf/p561.pdf.

Ira

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Author: Renegadecj Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 83913 of 121061
Subject: Re: Donating appreciated stock Date: 2/13/2006 4:41 PM
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No, the donation value is the average of the high and low price on the day effective valuation date. This is usually the day it leaves your account. For more information see IRS Pub. 561, Determining the Value of Donated Property, www.irs.gov/pub/irs-pdf/p561.pdf.

Ira


That is great to know. I received a donation valuation from one charity I donated to last year...and the stock actually closed substantially lower (about 5%) that day. I recieved a "donation valuation" for a value very close to the closing price (they said the value they sold it for).

I'll have to keep track of that for 2005 and 2006! Thanks Ira!!

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 83954 of 121061
Subject: Re: Donating appreciated stock Date: 2/14/2006 12:01 PM
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I was told by our tax people that the deduction is the value the stock sold for,

That's not what I understood it as. I thought the deduction was for the average value of the stock (high + low)/2 on the day the transfer takes place.

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