Charitable Giving of Appreciated Stock:  Good for Your Heart and Your 1040!

wendy-2An economic downturn may not seem like the best time to increase charitable giving, but at the same time, the need for funding at many nonprofits is especially acute as a result of the current economy.  In addition to supporting a worthy cause, you or your business can help lower your tax bill through cash donations, as well as contributions in the form of unused inventory or sponsorship.

 Choosing an Organization

When it comes to tax deductions for charitable giving, the rules are complicated.  As you begin to formulate a giving strategy, be sure that the organizations you intend to support have been awarded tax-exempt status by the Federal government. In addition to not-for-profit organizations engaged in charitable activities, qualified groups include nonprofit schools and hospitals, most churches and religious organizations, veterans’ groups, and public parks and recreational facilities.  You cannot deduct contributions made to political or lobbying organizations, most foreign charities or sports clubs, or for-profit groups.

If you are not sure if a group you are interested in supporting is qualified to receive deductible contributions, you can search for the name of the organization on the IRS website at https://www.irs.gov/charities-non-profits/exempt-organizations-select-check.

Gifts of Appreciated Property

When planned properly, gifts of appreciated property to charity may allow you to avoid the capital gains tax you would have owned when the asset what sold and may also allow you  to receive an income tax deduction, usually worth the fair market value (FMV) of the property.  Also, by removing that asset from your estate, you may reduce your potential estate tax burden.

Early tax planning can help you make the most of your charitable giving opportunities and allow you to take advantage of additional benefits.  Be sure to consult your team of qualified tax, legal, and financial professionals for specific guidance.

Overall Limitations

There are other things to keep in mind when developing a giving strategy.  To start, the IRS does not view all charitable contributions as tax deductible, and different rules apply. For personal deductions, the tax deduction may be limited depending on the type of property donated and the organization receiving the gift.  Deductions for cash may not exceed 50% of adjusted gross income (AGI) for gifts to public charities and 30% of AGI for gifts to private foundations.  For both long- and short-term appreciated property, the deduction is limited to 30% of AGI for gifts to public charities and 20% of AGI for gifts to private foundations.

 

chart-002

 

 Documentation Requirements

Regardless of whether you are donating cash or property, request a written acknowledgement from the charity for gifts in excess of $250.  This may, for example, take the form of a canceled check or a contribution statement from the charity, and it must indicate the amount of cash received or a description of the property given, as well as the value of any goods or services provided by the charity in exchange for the donation.

 

If you receive something in return for a charitable gift, such as tickets to a benefit event or an item from a charity auction, you are only permitted to deduct the amount of your contribution that exceeds the fair market value of the benefit received.  Thus, if you paid above fair market value for an item at an auction held by a qualified charity, you are permitted to deduct the difference between the retail value of the item and the amount you paid.

 

 

Making the Most of It

Remember, there are some limitations on charitable giving based on the type of gift, the type of organization receiving the gift, and your adjusted gross income (AGI) for Federal income tax purposes.  If you would like to maximize the tax benefits of charitable giving, be sure to consult a qualified tax professional.

 

 

Disclosures:

This content is for educational purposes only.

 

Investment Advisor Representative of Spire Wealth Management, LLC. Advisory Services offered through Spire Wealth Management, LLC, a Federally Registered Investment Advisor. Securities offered through an affiliate, Spire Securities, LLC, Member FINRA/SIPC.

 

The views and opinions expressed in this article/presentation are those of the authors and do not necessarily reflect the opinions of Spire Wealth Management LLC, Spire Securities LLC or its affiliates. Past performance may not be indicative of future results.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

 

 

 

 

 

 

Facebooktwittergoogle_plusredditpinterestlinkedinmail
Wendy Ann Payne is a Founding Partner of Centurion Wealth Management, an independent wealth management firm. Her desire to create Centurion Wealth came from her passion for helping clients gain financial independence and personal empowerment through insight, experience and education. She long dreamt of building a wealth management firm that provides holistic financial planning and investment guidance while striving to empower clients through financial education. Today, that vision is full of life.

During her 17+ year tenure in the wealth management industry, family tragedies have personally touched Wendy's life. What grew from this was a passion to educate and help others going through a life calamity and other stages of life. Through her desire to address women s financial planning needs, Wendy created Life Stage Transitions and Financial Independence for Women , comprehensive financial literacy programs and workshops. She also leads Centurion s Women, Wine and Wisdom initiative, educational seminars geared toward the financial planning needs of women. Through financial education, Wendy s goal is to empower women and revolutionize the way women navigate their ever-changing financial landscape.
Wendy specializes in working with women; newly-independent women, widows, divorcees and other women who suddenly find themselves solely responsible for making financial decisions for the first time. In 2011 she co-authored her first book, The Retirement Success Solution & Lessons I Learned from the Past Bear Market, where she wrote about the retirement planning challenges that are unique to women and the importance of financial planning.
Wendy is a Certified Senior Advisor, CSA , Wealth Management Advisor, and Life Stage Transition Specialist. Wendy currently holds her FINRA series 6, series 7, series 63, series 65, Life and Health insurance licenses.

About The Author

Wendy Ann Payne is a Founding Partner of Centurion Wealth Management, an independent wealth management firm. Her desire to create Centurion Wealth came from her passion for helping clients gain financial independence and personal empowerment through insight, experience and education. She long dreamt of building a wealth management firm that provides holistic financial planning and investment guidance while striving to empower clients through financial education. Today, that vision is full of life. During her 17+ year tenure in the wealth management industry, family tragedies have personally touched Wendy's life. What grew from this was a passion to educate and help others going through a life calamity and other stages of life. Through her desire to address women s financial planning needs, Wendy created Life Stage Transitions and Financial Independence for Women , comprehensive financial literacy programs and workshops. She also leads Centurion s Women, Wine and Wisdom initiative, educational seminars geared toward the financial planning needs of women. Through financial education, Wendy s goal is to empower women and revolutionize the way women navigate their ever-changing financial landscape. Wendy specializes in working with women; newly-independent women, widows, divorcees and other women who suddenly find themselves solely responsible for making financial decisions for the first time. In 2011 she co-authored her first book, The Retirement Success Solution & Lessons I Learned from the Past Bear Market, where she wrote about the retirement planning challenges that are unique to women and the importance of financial planning. Wendy is a Certified Senior Advisor, CSA , Wealth Management Advisor, and Life Stage Transition Specialist. Wendy currently holds her FINRA series 6, series 7, series 63, series 65, Life and Health insurance licenses.

Related Posts