To maximize your tax situation with an immediate deduction, consider making a charitable gift using personal assets:
Real Property
Several options for gifts offer a tax savings without affecting your spendable income:
Gift of a remainder interest in a personal residence (or farm)
The donor makes an irrevocable gift of the future interest in the property to a charity and retains the right to use the property for life. The donor gets an income tax deduction equal to the present value of the future interest without the expenditure of any cash or the reduction of income.
Gift of a conservation easement
A donor who is interested in the preservation of the natural or current state of property can give an easement to a charity, which restricts the future use of the property, and get a charitable contribution deduction for doing so. The practical measure of the deduction is the difference in the value of the property without the restriction and with the restriction. Here, too, the donor gets an income tax deduction without losing the use of the property or its income and with only a modest expenditure (the cost of valuing and granting the easement).
Gift of art or a partial interest in art
A charitable gift of valuable art (or other property) that is non-income producing may bring a donor a significant charitable deduction without the loss of spendable income. The gift of a partial interest in art may not only provide a charitable deduction, but would allow the donor partial use and enjoyment of the art.
Gift of any nonproductive asset
A charitable gift of any non-income producing asset may generate an income tax deduction. As with securities, you get a better tax benefit if the asset has appreciated in value and you have held it for more than one year.
To make a gift of real property or for more information, please contact us at
Jcef@Sfjcf.org or 415.512.6211
Life insurance
Donate a life insurance policy that you no longer find useful, and receive a charitable deduction for the cash value of the policy.
To make a gift of a life insurance policy or for more information, please contact us at
Jcef@Sfjcf.org or 415.512.6211
Stocks
Using stock is an excellent way to make charitable contributions. Here are tips on how best to use stock as a charitable gift.
Appreciated Stocks
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Donate appreciated stock held for more than one year and derive an additional tax benefit: avoidance of capital gain.
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Consider choosing appreciated stock with the greatest capital gain to take maximum advantage of this unique tax benefit.
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Appreciated stocks may be used to make current charitable gifts or used for life income gifts. Examples include a gift to a pooled income fund, a charitable gift annuity, and a charitable remainder trust. In these situations, you get a current charitable deduction while you retain the income from the property for yourself or a loved one.
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Deductions for gifts of appreciated property are limited to 30% of your adjusted gross income, but the excess may be carried forward for five years.
Depreciated Stocks
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Sell stock that has lost value and donate the proceeds. You can deduct the loss in value (cost basis less current value) and derive an income tax charitable deduction for the current market value.
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For stocks in which you have a loss, you will only get a deduction for their fair market value, not their cost. In this situation, it is better to sell the stock, take the capital loss and give the cash; then you will have two deductions, the capital loss and the charitable gift.
More Tips
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Give some, keep some. If you are not prepared to donate all of your shares of stock in a particular company, donate the amount of shares that will offset or reduce the gain when you sell the remainder of shares and keep the proceeds.
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If you will be in a higher tax bracket this year than next, consider accelerating your charitable gifting in order to take your deduction in this higher tax bracket year. If you are not sure which charity you would like to benefit, you can create a donor advised "gift fund" like those managed by the Endowment Fund. Using a donor advised fund, you get a charitable deduction in the year you make the gift, and you can make recommendations for charitable grants in the future.
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For stocks that have been held less than a year you can only deduct your cost (tax basis).
To make a gift of stock or for more information, please contact us at
Jcef@Sfjcf.org or 415.512.6211
