Gift Other charitable assets
Publicly Traded Securities
Giving appreciated securities is one of the most popular methods of giving because it can provide so many significant tax benefits to a donor and can be used to establish a fund or add to an existing fund. Donors who contribute long-term appreciated securities to the Foundation get a triple tax benefit:
- An income tax deduction,
- Avoidance of capital gains tax, and
- Avoidance of estate tax.
The deductible amount for gifts of appreciated securities depends in part on whether the stock was held by the donor for more than one year. For gifts of appreciated securities held one year or less the donor may deduct the cost basis up to 30% of adjusted gross income. Any excess may be carried over for 5 years. For gifts of appreciated securities held more than one year, the donor may: 1) deduct the full fair market value up to 30% of adjusted gross income with a 5 year carryover, or 2) deduct the cost basis of the stock up to 50% of adjusted gross income with a 5-year carryover. The second option may be advantageous when the assets are not highly appreciated.
Closely-held stock can be contributed outright to the Community Foundation and the donor is entitled to a deduction for the appraised fair market value. The donor also avoids the potential capital gains tax on any appreciation. Subsequent to the gift, Mt. Pleasant Area Community Foundation may sell the stock to the corporation or to other shareholders for cash. There can be no prior agreement between the charity and a potential buyer before the gift is made.
Retirement Plan Assets
For years, estate planners have recommended that retirement assets may be the most tax-effective asset in larger estates to distribute to charity. These assets are not only vulnerable to heavy taxation as part of an estate but also can be taxed again as income in respect to a decedent on the tax returns of heirs. You can designate the Community Foundation as beneficiary of your IRA, tax sheltered annuity, 401(k), or 403(b) plan. This avoids income, estate and generation-skipping taxes.
Holders of traditional IRAs who are 70 ½ years old or older can make a direct charitable transfer of up to $100,000---without being taxed. By going directly to charity, the money is not included in the IRA owner's income and--most importantly--is not taxed, preserving the full amount for charitable purposes. Do not withdraw the funds yourself. Request a distribution form from your IRA administrator and ask that the check be made out to the Mt. Pleasant Area Community Foundation. Be sure to notify the Community Foundation of your plans.
Life insurance policies are an excellent choice for creating a major gift at little cost to you. By naming the Mt. Pleasant Area Community Foundation as beneficiary of a new or existing life insurance policy, you receive a tax deduction for the value and any subsequent premium payments. When the policy is redeemed, the Community Foundation will use the proceeds to carry out your charitable objectives. The procedure is simple - you start by irrevocably assigning your insurance policy to the Mt. Pleasant Area Community Foundation. The Foundation is also named beneficiary of the policy. You can make annual tax-deductible contributions to cover the policy's annual premium. Or, if the policy is paid up, you will receive an immediate tax deduction in an amount equal to the policy's cash surrender value.
You can make outright gifts of real estate to the Community Foundation. If you have owned the property more than one year, both you and the Foundation can avoid paying capital gains taxes on the appreciation in value. The income tax deduction is usually equal to the fair market value of the property, with some exceptions. A qualified appraisal is required. If the amount of the gift exceeds 30% of your adjusted gross income, you can carry the excess forward for up to five more years.
Real Estate with Lifetime Use
You may gift your personal residence, vacation home, or farm to the Community Foundation and retain a "life lease" on the property. You deed the property to the Community Foundation and receive an immediate income tax deduction for a portion of the appraised fair market value. This allows you to use or rent the property until your death, at which time the Foundation takes possession of the property.