Act Now, Benefit Later

Can your gift that your favorite charitable organizations will receive years from now still be deductible on your tax return this year? If you make the gift through a charitable gift annuity, it can!

If you fund the gift annuity by Dec. 31, you'll receive a tax deduction for this year's income tax return.

When Gifts Count
It's fairly easy to determine when you're able to take an income tax deduction when you make an outright gift. The general rule is that a gift made to a charitable organization is credited on the date the donor loses control over it.

So when you write a check and mail it to your favorite charitable organizations, the date of the gift is the postmark on the envelope. When you tell your broker to transfer stock, the date of the gift is usually the day it's received in the account of charitable nonprofits. The timing of your gift is especially important if the end of the year is approaching and you want the gift to be credited for the current year.

What if your gift isn't outright, but rather is deferred? The rule of lost control still applies. For example, suppose you make a pledge this year to donate a certain amount during the next calendar year. Because you can change your mind before the gift is actually made, you can't take the deduction on this year's income tax return.

However, some deferred gifts are irrevocable. The charitable gift annuity falls into this category. The charitable gift annuity will provide you with payments for years before your favorite charitable organizations accesses the balance. Yet because once you fund the gift annuity you can't take back the money in it, you're allowed the charitable deduction in the year you set up the charit
able gift annuity for the amount charitable nonprofits is expected to receive someday in the future.

Why Wait?
If you're considering a charitable gift annuity with your favorite charitable organizations, why not arrange it in time to take the charitable deduction this year? We'll be glad to facilitate the process with you and your financial advisor.

How a CGA Pays You

Donor Profile:
Mr. Brown, aged 60, currently owns $20,000 in highly appreciated stock, which is producing low dividends. With retirement approaching, Mr. Brown is considering ways to secure his future income.

StrategyóReduce Capital Gains:
Mr. Brown establishes a $20,000 charitable gift annuity by donating his highly appreciated stock to your favorite charitable organizations.

Financial Benefits:
Annuity: $20,000
Annual Payout for Life: $1,200
Immediate Charitable Tax Deduction: $5,689*

A great advantage of funding a charitable gift annuity with a donation of highly appreciated stock is the reduction of capital gains tax liability. The 15 percent capital gains tax is eliminated on the gift portion of the transfer. Although he will have some capital gains tax spread out over his life expectancy, Mr. Brown avoids an immediate payment of $2,250 in capital gains tax that would be due if he sold the securities.
*Assumes a 4.6 percent charitable federal midterm rate; cost basis = $5,000

Please contact Mary Ludwig, Development Director at 712-732-5127, for more information.

The information on this site is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional or investment professional.

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