GIFTS-IN- KIND
What Are Gifts-In-Kind?
Transferring ownership of an asset, rather than selling the asset and
giving the cash, is a gift-in-kind.
What Kind of Assets Should I Give?
Appreciated investment property held more than one year, such as
stock, mutual fund shares, bonds, real estate, collectibles, and other
such property have tremendous tax advantages.
Personal property such as automobiles, jewelry, and other items may
also be given. There may be no capital gains tax benefits, but the
financial and spiritual benefits can be tremendous.
Why Give Gifts-In-Kind?
The tax code is very generous toward this form of giving. Giving the
asset to the church, then letting the church sell eliminates potential
capital gains taxes and can increase the after tax proceeds.
How Does The Tax Benefit Work?
Itemized Deduction: The individual or business is allowed to include
100% of the market value of most such assets as charitable
contributions for tax purposes if held more than one year.
Capital Gains: The transfer of property does not generate a capital
gains tax.
The church, as a tax exempt entity, will realize the full market value,
less transaction costs, at the time of sale without paying capital gains
taxes.
What If I Sell First Then Give The Cash?
You may be subject to capital gains taxes thereby reducing the after
tax proceeds from the sale. Here’s an example:
|
Sell First |
G-I-K |
Market Value |
20,000 |
20,000 |
Cost Basis |
-10,000 |
-10,000 |
Gain |
10,000 |
10,000 |
Tax (assuming 20%) |
2,000 |
-0- |
After Tax Proceeds |
18,000 |
20,000 |
NOTE: Any discussion of tax treatment is not intended and should
not be considered as tax advice. Consult your personal tax
professional for advice on your tax position. |
|
