Originally published on 10/11’s Pure Nebraska
Family, significant others and friends naturally find their way to shopping lists each holiday season. But places can also receive gifts, and Nebraska Community Foundation encourages generous Nebraskans to consider their hometowns during the gift-giving season.
When asked to make a gift to support the communities and causes near to their hearts, most Nebraskans wouldn’t hesitate to reach for their wallets. When it comes to making a larger gift, however, thinking beyond cash can help individuals and families make an even greater impact – not to mention provide tax benefits. Here are just a few assets to consider as one makes their end of year charitable gifts.
Charitable IRA Rollover: Those over the age of 70½ may make a qualified charitable distribution up to $105,000 from an IRA to a charity without paying taxes on the distribution. The gift may also qualify as a required minimum distribution. This is like receiving a 100% tax deduction.
Appreciated Securities: Making gifts of appreciated securities has several benefits. First, if one has owned the security for more than one year, it can be deducted at its current fair market value. Second, a sale of appreciated securities generates taxable gain. However, when one makes a charitable gift of securities, they pay no capital gains tax.
Grain/Livestock: A gift of commodities allows a farmer or rancher to avoid claiming the sale price of the commodity as income and to deduct the cost of production as a business expense.
Real Estate: A gift of real estate that has increased in value since ownership has several benefits. First, if one has owned the property for more than one year, the gift of real estate can be deducted at its current market value. Second, the sale of appreciated real estate generates a taxable capital gain. However, when one makes a charitable gift of the real estate, they pay no capital gains tax when it is sold by the charity.
Closely Held Stock: Transferring business ownership, either at retirement or as an inheritance, offers unique opportunities and benefits of charitable giving. Not only does transferring stock bypass capital gains and provide a charitable deduction, it also allows the corporation to buy back the stock.
Paid-Up Life Insurance Policy: By naming a charity the owner and beneficiary of a paid-up life insurance policy, one will be able to receive a current income tax deduction. The income tax deduction is approximately equal to the policy’s cash value or, if less, the premiums paid. Or one can name a favorite charitable organization or community fund as the beneficiary of a policy.
Nebraska Community Foundation (NCF) has an abundance of free information on charitable giving that doesn’t involve writing a check available at https://nebcommfound.giftlegacy.com. NCF always advises speaking with a professional advisor about the giving method that is best for a donor’s specific circumstances.
