Tax Benefits for Charitable Gifts
Gifts to the computer science department through the NC State Engineering Foundation, Inc., a registered 501(c)(3) tax exempt organization, qualify for any applicable deductions on income, gift or estate tax returns. The Foundation's Federal Tax ID Number is 56-6046987.
|Less Federal Income Tax Savings||($35,000)|
|Net Cost of Gift||$65,000|
Using appreciated assets to make a gift allows the donor to totally avoid capital gains tax on the asset transferred. If the property has actually declined in value since purchase, the donor should sell the property so that they may use the capital loss on their own income tax returns.
Gifts of real estate, privately held securities, or other capital assets having a value of $5,000 or more (the limit is $10,000 for privately held stock) require an appraisal of the fair market value of the asset and an IRS form 8283. These requirements must be met if the donor wished to qualify for a charitable deduction.
Charitable gifts of appreciated stocks, bonds, mutual funds or real estate that a donor has owned for twelve months or more are deductible at up to 30% of the donor's adjusted gross income for the year in which the gift is made and any excess deduction may be carried forward for up to five additional years. The approximate net cost to a donor making a gift of appreciated stock worth $100,000 of which $60,000 represented gain on the investment would be:
|Value of Appreciated Stock||$100,000|
|Less Capital Gain Tax Savings ($60,000 x 15% federal)||($9,000)|
|Less Federal Income Tax Savings ($100,000 x 35%)||($35,000)|
|Net Cost of Gift of Appreciated Assets||$56,000|
The calculation of the deduction is based on the ages of the beneficiaries, the rate of income to be paid, the fair market value of the gift and the federal discount rate in effect for the month the gift is made or either two of the previous months.
The charitable income tax deduction for gifts of cash to the NC State Engineering Foundation or other public charities may be used to offset up to 50% of the donor's adjusted gross income for the year of the gift. This limit also applies to those instances when a donor either chooses or must deduct the cost basis of an asset.
For gifts of appreciated property held for more than one year, the deduction can be used to offset up to 30% of the donor's adjusted gross income for the year. Any excess deduction that cannot be utilized in the year in which the gift is made can be carried forward for up to five additional tax years. The donor must use the deduction up as quickly as possible and can not "pick and choose" which years to use it.