Press ReleaseDonating highly appreciated assets can offer significant tax benefits for philanthropic clients, but the rules surrounding different types of charitable gifts can be complex.
In a recent Financial Planning Magazine article, Colleen Spain discusses how the tax treatment of donated assets can vary depending on how a charity intends to use the property.
From the article:
“In a hypothetical where someone has a car, and it’s worth pennies, a charity still may want it because maybe the charity can benefit from selling that car immediately and getting the cash out of it that they’re able to,” said Colleen Spain, Uniondale, New York-based counsel in the tax, not-for-profit and corporate practice areas at Farrell Fritz. “That donor’s charitable deduction is going to be limited to that immediate sale price — the gross proceeds from that sale — versus a situation where a charitable donation of a car is made, and an organization plans to make what the IRS calls a ‘significant intervening use’ of that vehicle,” if the charity uses it for its tax-exempt purposes, such as a work van for a soup kitchen to deliver food.
“Organizations are better able to use and accept appreciated stock (albeit, there is work to be done to sell, etc.),” she added.
Read the full article here (subscription required): Tax ‘traps’ and capital gains strategies for in-kind charitable donations | Financial Planning
