Planned Giving - Tax Planning Strategies


Giving the Right Asset

Careful planning and selection of assets is an important part of a “tax smart” gift. Whenever possible, donors will benefit greatly by giving “long term” appreciated investments or real estate. In this scenario, the donor receives a full market value charitable deduction and avoids payment of long-term capital gains tax.

Electing itemized or standard deductions

The astute donor will coordinate larger donations in tax years with higher expected levels of income. If you plan to sell a business, or are up for a bonus, stock option grant, or any other high income-recognition event, plan to offset your large tax liability with a larger-than-normal contribution to the nonprofits you support. For those households that do not realize a benefit from utilizing itemized deductions over standard deductions, consider how to “time” your gifts for the maximum tax benefit. A common strategy is to concentrate two or more years worth of giving into one tax year; you may also be able to pay two years of property taxes in the same year. You would then itemize your deductions for the current year, realizing that the standard deduction will most likely be used thereafter. This will allow you to realize an extra tax benefit, while keeping your actual donations the same.

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