Donating stock is a generous and tax-smart way to support a cause you care about. Here’s how to make sure you get the right deduction when you file your taxes!
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🧾 Acknowledgment Letters | 📈 Fair Market Value (FMV)
📝 Filing Taxes After Donating Stock
🧾 Acknowledgment Letters
If your stock donation was valued more than $250, your nonprofit is required to send you a charitable acknowledgment letter. This letter will include:
- ✏️ Description of your gift (the number and type of shares)
📥 Date your nonprofit received your stock gift
📈 Fair Market Value (FMV)
As required by federal tax law, donors are responsible for calculating both the Fair Market Value (FMV) and cost basis of noncash gifts (e.g., stocks, mutual funds, or other securities) for tax purposes.
🔗 IRS Publication 561 ("Stocks and Bonds"):
Selling prices on valuation date. If there is an active public market for the contributed stocks or bonds on a stock exchange, in an over-the-counter market, or elsewhere, the FMV of each share or bond is the average price between the highest and lowest quoted selling prices on the valuation date. For example, if the highest selling price for a share was $11 and the lowest $9, the average price is $10. You get the average price by adding $11 and $9 and dividing the sum by 2.
- ⚠️ If the liquidated value appears on your statement, we do not recommend using it, as it may not accurately reflect the fair market value at the time the shares were received.
- We always recommend consulting with your Financial Advisor (or tax professional) to ensure you’re receiving the full benefit of your generous gift.
📝 Filing Taxes After Donating Stock
To document your stock donation on your federal taxes, you’ll need to complete IRS Form 8283 (Noncash Charitable Contributions) and include it with your tax return.
What to Have Ready
- Name and address of the nonprofit you gave to
- Description of the stock (number of shares and company name/ticker symbol)
- 💡 Note: If you only donated publicly traded stock during the tax year, you can skip Section B of Form 8283. No signature is required.
- Date the stock was received by the nonprofit (check your acknowledgment letter)
- Fair Market Value (FMV) of the shares
- How you calculated that value
- Original purchase date (month and year) of the shares you donated