Charitable Tax Planning
Charitable tax planning helps families, small businesses, partnerships, and corporations optimize their giving. When it comes to managing your taxes, today’s regulatory environment can present many challenges, which makes the need for professional tax assistance greater than ever.
Our Three C’s
We pride ourselves in our ability to build relationships with our clients and their trusted advisors through clear communication, coordination, and careful attention to detail. For example:
- Gifting scenario analysis
- Restricted stock
- Real estate
- Business sales, succession planning, upcoming liquidity events
- Charitable estate planning
Contribution Types and Their Tax Implications
The iGiftFund accepts a variety of asset contribution options, and each of these impacts taxes in a unique way:
- Cash or check: IRS deductions for cash equal 60% of the AGI with a 5-year carryover. Click here for more information on increases in deductions in 2020 due to the CARES Act.
- Publicly traded securities (stocks, ETFs, mutual funds): The IRS allows a deduction of up to 30% of the AGI with a 5-year carryover.
- IPO stock: A donor may realize a much more favorable income tax result by contributing a portion of their IPO shares (either during or after the lock-up period) to their donor-advised fund. If a donor sells the stock first and then donates the cash proceeds to charity, the donor may be subject to capital gains taxes on the proceeds from the sale of the stock. If a donor contributes the IPO shares directly to a donor-advised fund, the donor can usually deduct the fair market value of the donation without realizing any capital gain.
- Life insurance policies: The tax deduction is based on the lesser of the cost or market value. Future premium payments are tax-deductible.
- Restricted stock, privately held stock (C-Corp, S-Corp, LPs, LLC): iGiftFund can accept restricted stock, including stock subject to a lock-up agreement; however, such restrictions may impact the valuation of the stock for charitable deduction purposes.
- Privately held business interests: These interests often have a low cost basis and a significant current market value, resulting in a potentially large capital gains tax when sold. By contributing a portion of these highly appreciated, privately held business interests to your donor-advised fund, you can generally take a full and fair market value income tax deduction for the contribution, while avoiding capital gains taxes on the appreciated values.
- Real estate: By contributing real estate to iGiftFund, the donor may take a full and fair market value income tax deduction for the donation, while potentially eliminating capital gains tax liability on the sale of real estate.
- Private equity, venture capital, hedge funds
Check/wire: The amount of the cash contribution.
Publicly-traded securities: The fair market value of the securities that have been held for longer than one year. iGiftFund calculates the fair market value of publicly-traded securities as the average of the high and low prices reported on the date of the contribution.
Mutual fund shares: The fair market value of the contributed mutual fund shares that have been held for longer than one year. iGiftFund calculates the fair market value of mutual fund shares as the closing price on the date of the contribution.
Securities not publicly traded: Typically the fair market value of securities that have been held for longer than one year. In most circumstances, the IRS requires a qualified independent appraisal to determine the fair market value. Appraisal costs are the responsibility of the donor.
Short-term securities: Limited to the cost basis or the current market value (whichever is lower) for assets that have been held for one year or less.
Note: This information is provided for informational purposes only, and should not be interpreted as legal and/or tax advice. Donors should always consult their legal and tax advisors regarding their specific situations.