Information for Advisors

The following information is provided for those who would like more details about the gift planning opportunities introduced in this Web site.

Income Tax Benefits

In order to receive maximum income tax benefits from your charitable gifts, you must be in a position to itemize deductions on your income tax return. What if you don't have enough deductions to qualify for itemization in a given year? By combining more than one year's charitable gifts and other deductible expenditures into a single tax year, you may be able to boost your total deductions over the minimum amount required in order to itemize. As a result, it may be possible to reap tax benefits from otherwise non-deductible charitable gifts and other expenses (such as property taxes on a home).

Carrying Over Excess Deductions

If you give more than the deductible limits for gifts in any one year, you may "carry over" any remaining deductions and make use of them over the next five tax years.

Giving Appreciated Property

Property that has increased in value and been held for the long-term holding period defined by law (currently one year and a day) is generally deductible for its current market value up to 30% of adjusted gross income (AGI). Exception: Tangible personal property (for example, art, antiques, collections, or jewelry) is deductible at full present value only if it is used in the furtherance of the recipient's tax-exempt purpose. If not (for example, if it is to be resold immediately), your deduction is generally limited to the original price paid for the property or its current value, whichever is lower.

Appraisals. To claim a deduction for certain gifts of non-cash property, it is necessary to obtain a qualified appraisal of the property. A "qualified appraisal" is required when non-cash property gifts have a claimed value of more than $5,000 ($10,000 for gifts of closely held stock). Exception: Publicly traded securities, such as stocks and mutual funds. See IRS Form 8283 for details.

Gift substantiation rules. For all gifts of $250 or more, donors must have a written acknowledgment and retain it with their tax records. Such letters must state the value of any benefits received by a donor in connection with their donation.

Guidelines for Drafting Charitable Trusts

In order to assure qualification for tax benefits, charitable trusts should be drafted by an attorney (as should wills and other legal documents).

To aid drafters of charitable remainder trusts, the IRS has issued specimen provisions to be included in the trust agreements. Many of these can be found in Rev. Proc. 2003-53 through 2003-60 and Rev. Proc. 2005-52 through 2005-59. Specimen forms for charitable lead trusts are available from research sources. Charitable trust forms that are preferred by particular fiduciaries are also typically available from them upon request.

For more information, see www.irs.gov and search for publication 526, charitable contribution; publication 561, determining the value of donated property; and Form 8283, non-cash contributions.

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