Best Assets for Giving
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.
Cash is a frequently used asset for all forms of charitable gifts, and it provides the most immediate deductions. Every dollar you give will be deductible up to 50% of your adjusted gross income, provided that you “itemize.” Excess deductions can be carried over and deducted in up to five future years. As an example, a $1,000 contribution will save $350 for someone in the 35% tax bracket, $250 for someone in the 25% bracket, and so on. Of course, tax savings are not the reason that friends support our endeavors, but they do enable supporters to do more than they might have thought possible.
People are often surprised to learn that there are different tax results for giving different types of property. If you give investment assets that have gone up in value, for example, or give highly appreciated securities, the results may be more in your favor. For instance, stocks that have been owned for more than one year allow donors to 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.
Our office is here to help, so feel free to contact us with any questions that you may have before selling your profitable stocks.
The tax benefits available for appreciated real estate are virtually identical to that of securities. First, you avoid capital gains tax on your profit. And second, you receive an income tax charitable deduction for the full fair-market value of the property you contribute. If you have any questions about real estate gifts, or wish to learn more about donating property investments, we encourage you to contact our office.
Believe it or not, our friends often find that they have “hidden assets”—items that seem like simple trinkets, but that end up helping them satisfy 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. If you are interested in the feasibility and tax benefits of donating unusual items, our office is available to assist you.
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The materials contained on this website are intended only to show some ways by which you can make a charitable gift or bequest and thereby minimize federal tax liabilities, as authorized by the Internal Revenue Code. All examples are of a general nature only and should not be applied to your specific situation without first consulting your attorney or other advisers.