IRA Qualified Charitable Distributions
IRA owners have who are 70½ and older have, in the past, had the ability to make charitable gifts directly from their IRAs of up to $100,000. The most important issue to remember related to these gifts is that the contribution has to come directly from the IRA administrator, not from the donor.
Cash is frequently used as an asset to make a charitable gift and it provides you with some of the most immediate tax deductions. Every dollar you give will be deductible up to 50% of your adjusted gross income. Excess donations can be carried over and deducted in up to five future years.
Tax savings are not the reason most individuals give for making gifts to NLU, but they can enable alumni and friends to do more than they thought possible. If you have investment assets, they may prove to be a better option for you.
You might be interested to know that individuals receive different tax results from giving different types of property. Highly appreciated securities may be especially favorable. If you have owned the stock for more than a year, you as the donor can deduct not only the original cost of the shares, but also the gains you have accumulated. Most importantly, there are no capital gains taxes due when you donate securities. The same applies for mutual funds and other types of investments. Please contact NLU before you cash in any profitable stocks that you are thinking of donating to us.
Do you have some investment assets you don’t anticipate needing for the near future? It is possible to contribute merely the income from this asset and enjoy substantial income tax or gift and estate tax benefits. A charitable lead trust is the gift vehicle that can make this possible. Another option would be to loan the University up to $250,000 and remove the annual interest from your tax bracket. This can be particularly helpful in a year when you have an exceptionally high income or face heavy federal tax. Please contact us for more information on this type of gift.
Real Estate/Tangible Personal Property
Much like appreciated shares of stock or mutual funds, a gift of real estate also allow you to escape tax on the capital gain element of the property. The same rules apply as above and you must have owned the property for at least one year. The full fair-market value is deductible up to 30% of your adjusted gross income and you still have five additional years to take advantage of any amount over the 30% ceiling. Personal property such as art, rare books or collections also make great gift assets as long the use of the property is related to education and the maximum capital gain tax rate is 28%.
One final item to consider if you are thinking about donating a personal residence, ranch, or farm, is the option to continue to use the property throughout your lifetime. In this instance you can make the gift, continue to use the property and receive an income tax charitable deduction. Please consult with either a real estate attorney or us before making such a gift.