2026 could turn out to be another banner year for gifts of stocks and other appreciated securities. Many of these gifts will be received in the closing weeks or days of the year and must be completed for tax purposes, so it pays to be prepared to handle these transactions. Here are some things to know:
- Who owns the securities? Are they held in an investment account in your name only or held jointly?
- How are they owned? For securities held in brokerage accounts, the donor should instruct their broker in writing to transfer the asset to the charity’s account or brokerage firm. If the donor wishes to give a mutual fund, the charitable recipient may be required to open an account with that fund for the shares to be transferred without triggering capital gains for the donor. Certain funds can be transferred in much the same manner as individually traded securities.
- When is the gift complete? The general rule is that the gift is complete when the donor has irrevocably relinquished all ownership and control over the property. If a broker is given transfer instructions, the gift is generally complete when assets are actually transferred into the charity’s account.
- What is the value of the gift? Gift value for the donor’s tax purposes is determined on the date of the gift and is not related to the value the charity receives upon selling the property.
- Establishing value for tax purposes is ultimately the donor’s responsibility.
- The charity should acknowledge the gift by describing the assets contributed (number of shares, etc.) and the date the gift was received.
If a value is stated as a matter of convenience and to indicate the amount of credit being given to the donor for their gift, a disclaimer should always be added. The disclaimer should state that donors are encouraged to seek their own counsel in tax matters.
