|
 Helpful Articles
from David Vollrath,
Union County Foundation Executive Director
The Foundation encourages you to work closely with your professional advisor(s)
as you develop your estate plan and consider your present and future charitable goals. |
Charitable Gifting of Personal Property
(Part of a series of articles on charitable giving and the Union County Foundation
by David Vollrath - Exec. Dir.)
Charitable gifts of tangible personal property are a way to support charity that too
often may be over-looked. Such gifts can produce significant charitable deductions while supporting important philanthropic
causes. What exactly is tangible personal property? It is basically any kind of physical property that you can
move about: this would include art, stamp collections, jewelry, cars, etc.
There are several questions regarding the allowable deduction for a gift of tangible personal
property: What is the maximum allowable deduction? Is the allowable deduction based on the purchase price of the
property or the current full value? The answers to theses questions can be found in the following rules:
- Rule 1 – Gifts of tangible personal property are deductible at the lower of your
cost for the item or its current market value. Some items will actually devalue over time; an example might be
a vehicle. A vehicle originally purchased for $25,000 that now can is sold for $5000 is deductible at the lower
figure. Another example of values declining over time would be clothing donations.
- Rule 2 – The deduction is the "full value" for property that is used
by the charity for its tax-exempt purpose. If the property has increased in value since your original purchase
then you can deduct the present full value. An example might be a piece of art originally purchased for $500 that
now has a value of $5000. Such an item would be deductible at the full $5000 if it is donated and accepted by an
art museum that uses the donated piece in a manner that is consistent with their tax-exempt mission. In this case
if the museum retained the work of art and used it in a display of artwork this would be considered a "related
use" and would qualify for the full deduction.
- Rule 3 – If the charity does not use your donated item then your deduction is
considered to be your "cost basis." An example would be a coin collection which cost $10,000 but is now
valued at $15000. If the receiving charity sells the collection for $15000 and uses the proceeds to support its
programs then the allowable deduction to the donor is the original cost of $10,000.
By being aware of the above rules, friends of charities can most effectively support philanthropy
while at the same time maximizing their charitable deductions. As is always the case you will want to consult your
financial professional advisor(s) regarding your specific situation in regards to charitable gifts of tangible
personal property.
The Union County Foundation encourages you to consider your present and future charitable
goals. The Foundation is equipped to help you achieve these goals by providing: planned giving and estate planning
resource information, charitable gift annuities/life income plans, and a broad array of charitable choices. Please
call us at 937-642-9618, email us, reference our website, or stop by our Marysville office at 126 N. Main St. We
are committed to helping you.... “preserve your footprint in time.”
|
