Tax Ideas Regarding Charitable Contributions

Tax-Smart Ideas to Stretch Your Support for Charitable Organizations

Give Securities Instead of Cash
You can magnify your support for worthwhile causes by giving stocks or other assets that have (a) gone up in value and (b) been owned by you for more than 12 months. You can deduct your cost, plus your untaxed "paper profit" (capital gain), up to 30% of your adjusted gross income. Excess deductions can be carried and deducted for up to 5 years. Cash gifts are deductible up to 50% of adjusted gross income.

Make a Large Gift, Receive a Partial Deduction, But Keep a Lifetime Income
You can make a gift of significance today yet reserve income for life for yourself or others. You can choose between a fixed income and variable payments. You'll receive a charitable deduction for a part of what you give and if you fund your gift with securities, you may reduce or avoid capital gains taxes. Lifetime payments maybe taxed under favorable rules. Contact your accountant for details.

Make Gifts From Your Business
If you own a business, you may have two "pockets" from which to give. Owners of closely held corporations should consider contributing stocks in their companies. In some cases, it may be more favorable for the corporation to make charitable gifts. Ask your advisors.

Make "Temporary" Gifts of Cash or Income-Producing Property
Letting a charity "borrow" income-producing assets for several years (through a charitable lead trust), with the assets later passing to children or grandchildren, can reduce income taxes and future gift taxes, estate taxes and generation-skipping transfer taxes.

(Reproduced from the Charitable Giving Tax Service from R&R Newkirk)

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