Best Assets for Giving
Cash is a frequently used asset for all forms of charitable gifts and provides the most immediate deductions. Every dollar you give will be deductible up to 50% of your adjusted gross income, if you “itemize.” Excess deductions can be carried over and deducted in up to five future years. A $1,000 contribution saves $350 for a person in the 35% tax bracket, $250 for someone in the 25% bracket. Tax savings are not the reason friends support our endeavors, of course, but they do enable supporters to do more than they might have thought possible. But the results may be better if you give investment assets that have gone up in value.
People often are surprised to learn that there are different tax
results from giving different types of property. Gifts of highly
appreciated securities, for example, may be particularly favorable.
If stocks have been owned more than one year, then donors can deduct
not just their original cost, but also any “paper profit” present
in the gift. Best of all, there are no capital gains taxes or net investment income taxes due when
you give securities. Mutual funds and other types of investments
offer the same advantages.
Call us before . . . you sell profitable stocks.
IRA Qualified Charitable Distributions
IRA owners ages 70½ and older may make charitable gifts directly from their IRAs of up to $100,000 annually. Income tax deductions are not available for IRA “qualified charitable distributions” but donors may save taxes anyway, where gifts take the place of required minimum distributions, which are generally 100% taxable. IRA gifts may be especially attractive to donors who do not itemize deductions on their income taxes. Note: It’s important that you coordinate IRA contributions with our office. We will need to provide you and your IRA custodian with important information and ensure that you receive appropriate tax receipts.
Friends can establish donor-advised funds with community foundations or brokers, and are entitled to charitable deductions when the funds are created and can then recommend charitable recipients. Call us about making a gift through a donor-advised fund.
The tax benefits available for gifts of highly appreciated real
estate are virtually identical to those for gifts of securities
that have gone up in value. First, you avoid capital gains tax on
your profit. Second, you receive an income tax charitable deduction
for the full fair market value of the property you contribute.
Call us before . . . you sell investment real estate, vacation property or farm land.
Many of our friends own stock in their own businesses that can be given
at extremely low cost, providing personal deductions that are “paid
for” by the company.
Call us before . . . you sell your business, sell replacement stock from an employee stock ownership plan (ESOP) or plan for passing your business to the next generation.
Many people own life insurance policies purchased years earlier to protect young families. There are several options if you own a policy that is no longer needed for its original purpose, such as cashing it in or converting the policy to an annuity. A more satisfying use for the policy might be as a charitable gift. You can give ownership of the policy and be entitled to an income tax charitable deduction. Or you can keep ownership rights (the right to borrow against the policy, for example) while naming us as the beneficiary.
Some of our friends find they have “hidden assets” that can help
them in satisfying their philanthropic goals. Antiques, paintings
and other “collectibles” – even patents and copyrights – can be valuable
assets for giving. In many cases, the same favorable tax rules apply
to these gifts that apply to securities and real estate. Please
check with us on the feasibility and tax results of gifts of unusual
Call us before . . . you sell collectibles at a profit.
If any of the ideas discussed here are of interest, contact the Planned Giving Office at 888.217.4829.