Donation of publicly-traded stock

[ttbtaxes]

Client donates shares of a publicly-traded stock to a 501(c)(3) in excess of $10,000. His local broker completes the "wire transfer" of securities to brokerage company on 12-20-14. The brokerage company "wire transfers" the shares of stock on 12-30-14 to the brokerage company of the 501(c)(3). The 501(c)(3)'s record shows the stock in their portfolio on 1-2-15.

Is it is deductible donation for 2014?

[Roland Slugg]

Regs §1.170A-1(b) covers this and reads as follows:

(b) TIME OF MAKING CONTRIBUTION. Ordinarily, a contribution is made at the time delivery is effected. The unconditional delivery or mailing of a check which subsequently clears in due course will constitute an effective contribution on the date of delivery or mailing. If a taxpayer unconditionally delivers or mails a properly endorsed stock certificate to a charitable donee or the donee's agent, the gift is completed on the date of delivery or, if such certificate is received in the ordinary course of the mails, on the date of mailing. If the donor delivers the stock certificate to his bank or broker as the donor's agent, or to the issuing corporation or its agent, for transfer into the name of the donee, the gift is completed on the date the stock is transferred on the books of the corporation.

(Emphasis added.)

After a careful reading of the above Reg ... especially the portion highlighted in red, which matches what your client did ... it would seem that the T/P must determine the date the shares were transferred into the charitable organization's name on the records of the issuing corporation. It is likely that the re-registration took place on January 2nd, 5th or 6th, and if so, that would make it a 2015 gift. If, however, the re-registration took place on December 30th or 31st, then it was a 2014 gift.

You didn't ask, but the same Regs go on to explain how to value the donation of a publicly traded security.

[Kram BergGold]

My Answer

The charity has to give the donor an acknowledgement letter. That letter will say on this date we received.....
Whatever the tdate is, that is the year of the deduction.

[TomJ]

I'd say it's a valid 2014 contribution because once the wire transfer goes out, the taxpayer has unconditionally made the contribution. There's no way to get that money back or stop the wire once it's sent. The org can date their letter as received 1/2/15 (just as they would do if a check was mailed 12/28/14 and received 1/2/15, but if the taxpayer's records show that he made the unconditional gift during calendar 2014, that should be the date of the donation.

[Burke]

I agree. And the basis is determined (usually as an average of the high/low of the day) on the date the donation is made.