Taxes

• The purpose of valuation dating for gifts is to determine the fair market value at the time of receipt. This amount will be used to calculate the earnings or loss derived upon the sale of the asset, and you will be taxed on this amount. It is also used to determine the amount reportable as a charitable donation and in deciding if the gift is large enough to require taxation of the recipient. Because securities prices are often volatile, the date used to calculate the average price for the day can be critical to the proper valuation of the gift.
  
  

Documentation

• Establishing the valuation date may be tricky, especially if it is not a face-to-face exchange of stock certificates. Use the postmark date on the envelope used to send the gift securities or the date the securities transferred into the recipient's market account.
  
  

Fair Market Value

• Fair market value is determined by the average purchase price of the security through a stock exchange on the date of valuation. If you do not have access to the information, consult with a brokerage firm.