For anyone who has achieved a certain level of wealth and accumulated assets, there comes a time when charitable giving becomes an option that needs to be evaluated.
Regardless of whether or not the reason for giving is rising taxes and maintenance costs, declining interest or benefit, or simply a longing to do something good that has you considering donating a lifetime gift of appreciated property to a charity, your gift will have considerable income tax consequences.
However, making such a charitable donation requires more decisions than just which charity to choose. It requires careful evaluation of the property you select and the time you choose to make the donation. Both play a role in maximizing the benefit of your charitable contributions deduction, as do other factors, including:
- How long you've owned the property: your length of ownership determines if your gift will receive favorable treatment as long-term capital gain property
- Whether your intended recipient is a public charity or private foundation: certain contributions must be reduced by the amount that would have been long-term capital gain if the property had been sold instead of contributed
- Why and when you should elect to reduce the deductible amount of your long-term capital gain property donation: by electing to reduce the total amount deductible with respect to your contribution, you may increase the maximum amount deductible in the year of contribution
- How and when to substantiate the value of your property: questionable claimed values may subject you to an overvaluation penalty as well as other sanctions
I am a firm believer that generosity pays. And I have years of experience helping people like yourself bring to fruition their donation desires while receiving the maximum benefit from current tax laws.
Please note the information above is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of the information provided below should not be acted upon without specific professional guidance. Please call us if you have any questions.