CMS - Contributions - Entering Stock Contributions

People are realizing the benefits in supporting their church through the gifts of stock.  

If the contributor chooses to transfer long-term, appreciated stock to the church, it can be sold by the church and the contributor will avoid tax on the gain, in addition to taking that charitable deduction on their taxes.  

If the stock had been held long-term but had decreased in value, it may be more advantageous for the contributor to sell the stock and give the cash to the church.

To figure how much the contributor may deduct for property that they contribute, they must first determine its fair market value on the date of the contribution. Fair market value is the price that property would sell for on the open market.  The Fair Market Value of each share or bond is the average price between the highest and lowest quoted selling prices on the valuation date.

Since the value of stocks changes on a daily basis, the contributor must determine the date of delivery of the stock.

Transfer in person.  If the contributor wishes to transfer stock to the church by handing the certificate to a member of the church staff, then the transaction can be completed by either having the contributor sign the certificate on the back, or by having the contributor sign a stock power.  

The contributor should also provide a letter of intent stating his/her intention to make a gift of stock to the church.  The letter of intent should state that the gift is for the church, the date of the gift, name of the stock, number of shares, designation of the proceeds, and include an original contributor's signature.  

Transfer by mail.  If the stock is in the contributor's name, they should mail the unsigned certificates with a signed letter of intent (as described above) via certified mail to the church.  The contributor should also send a signed stock powers in a separate envelope.

Transfer by broker.  Since paper certificates can be lost, stolen, or damaged, encourage contributors to have a broker transfer the shares of stock electronically instead of having a stock certificate issued.  Have the contributor instruct the broker to notify the church regarding the stock transfer, including:

  • Contributor's Name(s)
  • Security Name(s)
  • Number of shares or approximate value
  • Gift designation or purpose (unrestricted or restricted to a particular fund)
  • Broker's name and phone number 

Once you have determined the date and fair market value of the gift, you can enter this information into your CMS Contribution System.

From the CMS Contribution System menu, click Enter Contributions and create a New Batch for the date of delivery of the stock.

From the Contribution Entry screen, bring up the contributor who gifted the stocks and go to the fund the contributor designated.

Enter the Fair Market Value of the gift in the Amount field, and type an S in the Type field and press (Enter).

Or, click the up arrow at Type and select the contribution type of Stocks/Investments and click Select.

This will display a Special Contribution window.  

NOTE:  DO NOT enter anything in the field Value of Goods or Services Received by Contributor.  This is used only for Quid Pro Quo contributions, and not Stock Contributions.

Enter the description of the stock and the number of shares.   What you enter in the description field will print on this contributor's Yearly Detail statement.  The following phrase meets the church and IRS needs:

"This records a gift of 200 shares of GE Capitol Stock. We have assigned a gift value of $5,000.00 to be credit to your Building Fund pledge. You are required to obtain a Charitable Contribution valuation of this gift for tax purposes."

Click OK when complete.

 

Print an Edit List and Post the Batch as normal.

For complete information, see the IRS Publication 561 at http://www.irs.gov/publications/p561/index.html, or consult with your church accountant.

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