While organizations typically receive donations in the form of cash, every once in a while they may be given a non-cash item. In this article, we will go over how to properly record the donation of a stock or investment security, as well as the subsequent sale for a gain or loss.
Tracking the brokerage account in full will allow you to record the full amount of the gift, as well as the fees, gain/loss on sale, and the running balance of the brokerage account. To start, you will want to create a number of accounts if you don’t already have them in Aplos:
– In-Kind Gift = income account (can use a pre-existing income account if you prefer)
– Gain on Sale of Asset = Income account
– Loss on Sale of Asset = Expense account
– Brokerage Fees = Expense account (can use a pre-existing expense account, if preferred)
– Brokerage Account = Asset account (make sure to choose “use as a register” for the type)
Let’s run through a couple of examples below.
Example 1: Stock donation with subsequent sale for a gain
Let’s say you receive a security with a Fair Market Value (FMV) of $1,000. You will record this in Aplos as a contribution from that donor for the FMV. Since you have the Brokerage account as a register account, you can post the deposit/contribution straight into that account. This will show that you received $1,000 as a donation, and the Brokerage account will now have a balance of $1,000.
Now say you turned around and sold that security for $1,100 with a $50 brokerage fee. In Checking (or wherever the net value is deposited), post a split deposit for $1,050, or the net amount of the sale. The split lines for this deposit will be:
Brokerage asset = $1,000
Gain on Sale of Asset = $100
Brokerage Fees = ($50)
These split lines will net to the $1,050 you put in for the deposit, allowing you to post. Once posted, your income statement will show the $1,000 for the gift, $100 gain on sale, and $50 brokerage fee. The Brokerage account will be reduced to $0, with the Checking increasing by the net sale amount. The Brokerage account will show the history of all activity; both the initial donation and subsequent sale for a loss.
Example 2: Stock donation with subsequent sale for a loss
Again, let’s say you receive a security with a Fair Market Value (FMV) of $1,000, and again, you will record this in Aplos as a contribution from the donor for the FMV. Since you have the Brokerage account as a register account, you can post the deposit/contribution straight into that account. This will show that you received $1,000 as a donation, and the Brokerage account will now have a balance of $1,000.
Now say that this time, you sold the security for $900, with a $50 brokerage fee. In Checking (or wherever the net value is deposited), post a split deposit for $900, the net amount of the sale. The split lines for this deposit will be:
Brokerage asset = $1,000
Loss on Sale of Asset = ($50)
Brokerage Fees = ($50)
These split lines will net to the $900 you put in for the deposit, allowing you to post. Once posted, your income statement will show the $1,000 for the gift, $50 loss on sale, and $50 brokerage fee. The Brokerage account will be reduced to $0, with Checking increasing by the net sale amount. The Brokerage account will show the history of all activity; both the initial donation and subsequent sale for gain.
Note: If you are using another platform to track contributions, you can still use the above process. Instead of using Aplos’ contributions feature, you will instead post a deposit in to the Brokerage register for the FMV of the donation.
