Chartered Retirement Planning Counselor (CRPC) Practice Exam 2025 - Free CRPC Practice Questions and Study Guide

The basis for a charitable contribution deduction for stock is determined by the current fair market value of the stock at the time of the donation. This is significant because when individuals donate appreciated securities to a qualified charity, they can generally deduct the fair market value of the stock rather than the purchase price or original basis. This allows donors to maximize their tax benefits, as the deduction reflects the increased value from when the stock was originally acquired.

This approach is intended to encourage charitable giving by providing a more advantageous tax treatment for those who donate appreciated assets, effectively allowing donors to avoid capital gains taxes that would be incurred if they sold the stock instead of donating it. The fair market value is established based on what a willing buyer would pay and a willing seller would accept in an open and unrestricted market on the date of the contribution, ensuring that the deduction accurately reflects the value of the asset being contributed.