Valerie E. Rumbough, CPA, CFP
Vice President of Finance
I purchased some publicly traded stock in March 2004 for $35 a share. Currently, it is worth $50 a share, and I plan to contribute it to my church before the end of the year. What am I allowed to deduct on my tax return?
$35 per share. Let me explain why this is so.
The IRS allows a deduction for the fair market value of non-cash items to a qualified charitable organization if the asset has been held for at least one year and one day. Otherwise, you are only allowed to deduct your cost in the item. In this case, you will only be allowed to deduct $35 per share.
In the event you contribute stock that you hold for more than one year, you are allowed to use the fair market value. However, be aware that the fair market value you use is determined by taking the average of the highest and the lowest prices the stock sold for on the day you made the contribution.
For example, your stock price may go from a low of $40 to a high of $50 on the day you give it to your church. The average of these two prices is $45 per share. Even if it was worth $50 at the end of the day, the value you claim will be $45.
The next time you make a contribution, you may want to choose stock that you have held for at least a year and a day in order to take advantage of the larger deduction. Your broker should be able to help you with the value as well as the timing of the contribution.
