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- Fund Options at The Community Foundation
- Investment Options
- Outright Gifts
- Gifts of Residence or Farm with a Retained Right
- Gift of Undivided Interest of Property
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An outright gift is just what its name implies: a gift transferred immediately from the donor to The Community Foundation. This category can include cash, securities, tangible or intangible personal property, or real estate.
Gift of Cash
For all concerned, an outright gift of cash is certainly the simplest method of giving. It is not subject to gift taxes and it is removed from the donor's estate for estate tax purposes; plus donors can deduct the gift amount on their federal income tax return, up to 50 percent of their adjusted gross income. Should the gift total exceed the gift ceiling for one year, donors can carry over the remaining deduction to succeeding tax years until it's exhausted, or for up to five years, whichever comes first. So with careful planning, nearly every outright gift to the Foundation can be fully deducted.
Example: Mr. Strauss has a $70,000.00 adjusted gross income this year. He contributes $50,000.00 to the Community Foundation. He can deduct $35,000.00 this year ($70,000.00 adjusted gross income x 50 percent). Because of the five-year carry-over, the remaining $15,000.00 can be deducted the next year (assuming his adjusted gross income is $30,000.00 or more). So his $50,000.00 gift is fully deductible.
Gift of Securities
Giving appreciated stocks or bonds is a superb way to show support for the Foundation's programs. With certain limitations, donors can deduct the full fair market value of long-term appreciated securities - that is, securities donors have owned for more than one year and that have increased in value. Thus donors can give away appreciated property and usually avoid the tax on the gain.
Gifts of securities are deductible up to 30 percent of a donor's adjusted gross income, with a five-year carry-over. Under certain circumstances, however, donors can choose to qualify for the 50 percent adjusted gross income ceiling by reducing the value of the gift by the full amount of its appreciation - that is, to its cost basis (what the donor paid for the asset).
Example: Ms. Curtis contributes long-term securities, which cost her $25,000.00 and are now worth $30,000.00. She is entitled to a $30,000.00 charitable deduction and completely avoids paying tax on the $5,000.00 appreciation.
There are several significant benefits that can result from gifts of appreciated closely held stock. Please contact the Foundation for more information on this unique gift opportunity.
Tangible Personal Property
This includes such items as works of art, antiques, books, gems and the like. Donors may, of course, give an item whether or not it has increased in value since obtaining it. Perhaps the greatest tax benefits come when the donated object is what the Internal Revenue Service (IRS) considers long-term capital gain property. As mentioned in the section on securities, this means that the asset has appreciated in value and a donor has held it for more than one year.
A donor's income tax deduction will depend upon the nature of the gift and its correlation to the Foundation's stated, tax-exempt mission. If the Foundation's use of the gift is related to the Foundation's tax-exempt purposes, it qualifies for an immediate income tax deduction equal to its fair market value on the date of the gift. If the Foundation's use of the gift is not related to the Foundation's tax-exempt purposes, the donor's charitable deduction is restricted to the asset's cost basis. Donors may claim the deduction in the year the gift is made - up to 30 percent of adjusted gross income (for long-term capital gain property) - and carry it over, if necessary, for up to five years. Under certain circumstances, donors can choose to qualify for the 50 percent ceiling by reducing the value of the gift to its cost basis.
Each gift item must be evaluated on an individual basis to determine whether or not it is related to the Foundation's tax-exempt mission. For information concerning any gift of this type, please contact the Foundation.
Intangible Personal Property
Donors may also make gifts of personal property that cannot be seen or touched. Such property is called "intangible" and it includes copyrights, securities (discussed earlier), patents, contracts, promissory notes, royalties, trademarks and the like. Unlike tangible property, intangible personal property does not have to be scrutinized - for income tax purposes - for its relevance to the Foundation's tax-exempt mission.
As far as gift and estate taxes are concerned, tangible and intangible personal property are treated the same. An outright gift of tangible or intangible personal property is not subject to gift taxes and is removed from a donor's estate for estate tax purposes.
Almost any type of real property - a personal residence, a farm, a vacation home, a commercial building, or an undeveloped parcel of land - can be the subject of a gift. Gifts of real estate can be made either outright or through one of the methods that are discussed in the articles following.
If the property is long-term capital gain property and given outright, donors generally avoid any tax on the gain, reduce the taxable estate by the value of the gift (for estate tax purposes), and receive a charitable contribution deduction for 100 percent of the fair market value of the property.
A donor's actual income tax savings will depend on their tax bracket. Donors may deduct the value of the gift, up to 30 percent of adjusted gross income.Under certain circumstances, donors can choose to qualify for a 50 percent annual deduction by reducing the value of the gift to its cost basis.