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See Report Number One for the five kinds of charities under Section501(c)(3). professional tax software, federal income tax tables, oklahoma tax commision, tax deductions, irs tax tables, tax planning, colorado state tax forms, oregon state taxes, north carolina tax forms, oklahoma tax forms, applying for a tax id number, income tax canada, income tax questions, payroll taxes, pa state tax forms, illinois tax form, file taxes online, maine state tax forms, 2002 taxes, complete tax, 2002 federal income tax tables, kansas state tax forms, property tax information Property tax information. Charitable deductions are allowed only if the gift or bequest is made to a qualified charitable organization. The Five Year Carryover RuleAny gifts that are made which exceed the percentage allowed for deductibility in a particular year may be carried over for a period of five years for deductions in later years. Gifts of CashThese are deductible up to fifty (50%) percent of adjusted gross income. professional tax software, federal income tax tables, oklahoma tax commision, tax deductions, irs tax tables, tax planning, colorado state tax forms, oregon state taxes, north carolina tax forms, oklahoma tax forms, applying for a tax id number, income tax canada, income tax questions, payroll taxes, pa state tax forms, illinois tax form, file taxes online, maine state tax forms, 2002 taxes, complete tax, 2002 federal income tax tables, kansas state tax forms, property tax information Professional tax software. Gifts of Publicly Listed StockIf the stock is held long-term the deduction is for the market value with no tax due on the appreciation - - - deductible up to thirty (30%) percent of adjusted gross income - - - under an election of the donor the deduction can be up to fifty (50%) percent of adjusted gross income if the election is made to limit the amount of the deduction for all long-term property gifts during the year to cost basis. As to public stock held only short-term, the deduction will be based on cost or current market value, whichever is lower, and will be deductible up to fifty (50%) percent of adjusted gross income. Real Estate GiftsIf held long-term, deductible at market value with no tax on the appreciation up to thirty (30%) percent of adjusted gross income - - - donor can increase the ceiling to fifty (50%) percent by reducing the amount of the gift to cost basis. professional tax software, federal income tax tables, oklahoma tax commision, tax deductions, irs tax tables, tax planning, colorado state tax forms, oregon state taxes, north carolina tax forms, oklahoma tax forms, applying for a tax id number, income tax canada, income tax questions, payroll taxes, pa state tax forms, illinois tax form, file taxes online, maine state tax forms, 2002 taxes, complete tax, 2002 federal income tax tables, kansas state tax forms, property tax information Illinois tax form. If real estate is held short-term, deduction is for cost basis or current market value, whichever is lower, up to fifty (50%) percent of adjusted gross income. Any portion of the value that would be subject to recapture as ordinary income will reduce the charitable deduction. Ordinary Income PropertyDeduction allowed for cost basis or current market value, whichever is lower - up to fifty (50%) percent of adjusted gross income. Tangible Personal PropertySuch property, for example works of art, books, antiques which have been held long-term, a deduction is allowed for full market value with no tax on appreciation if use of the property is related to the exempt function of the donee, for example a gift of painting to an art museum - - - up to thirty (30%) percent of adjusted gross income (can be deductible up to fifty (50%) percent of adjusted gross income if deduction elected to be based on cost basis). Deduction is for cost basis or current market value, whichever is less, when the gift is unrelated to the exempt function of the donee - - - up to the fifty (50%) percent of adjusted gross income. If the property has been held short-term then deduction is based on cost or market value, whichever is lower, up to fifty (50%) percent of adjusted gross income. Bargain SalesThis is a combination of a sale and a charitable gift and the contribution is the difference between fair market value and sale price of long term securities and real estate - - - cost basis must be allocated between property soldand property given and appreciation allocable to sale portion is subject to capital gains tax. NOTE: Outright gift of mortgage property is considered a bargain sale. Partnership GiftsThe contributions are not deductible on partnership return but deductible by individual partners - - - ceiling on deductibility is ten (10%) percent of taxable income - - - basis of each partner's interest is decreased but not below zero (0). CorporationsCeiling on deductibility is ten (10%) percent of taxable income. If corporation on an accrual basis can deduct gift on current return, if authorized, and then paid within two and one-half (2=) months after close of year. Special gifts of inventory for ill, needy, minors - - - or gifts of some equipment to schools - - - deducted at cost plus one-half (=) of appreciation - - - or twice the cost - - - whichever is lower. If a corporation is SubchapterS - all deductions passed through to stockholders in proportion to ownership of stock - - - subject to their individual percentage limits on deductibility. Possible Reduction for Taxpayers Who ItemizeTaxpayers who itemize must reduce their itemized deductions (except medical, casualty, theft and investment interest) by an amount that equals three (3%) percent of adjusted gross income (over $126,600 for joint filers and over $63,300 if married filed separately - in 1999), this amount is adjusted annually for inflation - - - cannot reduce by more than eighty (80%) percent of the itemized deductions. Fair Market Value of Donated PropertyWith respect to public stock, fair market value is the mean between the high and low value on date of delivery of the gifts - - - for mutual funds fair market value is redemption price. For real estate and other property, the value is the price at which the property will change hands between a willing buyer and a willing seller and is determined by an appraisal. The cost of the appraisal is a miscellaneous itemized deduction subject to the two (2%) percent floor. Substantiating Charitable DeductionsAppraisal and reporting requirements are strictly enforced, and as to gifts of property other than public stock, an independent appraisal is needed if the value is over $5,000 (over $10,000 for closely held stock) - - - for lower valued gifts, appraisal summary may be required without full appraisal. For any gift over $250, donor must have written substantiation from the charity (including an estimate of value of any goods or services given back to the donor). Also, with respect to any gifts made to a charity over $75 for specific goods or services, quid pro quo gifts, charity must inform donor that gift deduction is limited to the excess of the amount given over value given back to the donor. Volunteer Services and ExpensesNo charitable deduction is allowed for any personal services rendered voluntarily - - - necessary expenses that are not reimbursed by the charity may be deductible. No deduction allowed for rent free use of property to a charity. Depreciable PropertyWith respect to deductions for any depreciable property, the amount of the deduction is reduced by what would have been taxed as ordinary income had the property been sold. Estate Tax DeductionsAny portion of a person's estate left to any recognized charity under 501(c)(3) including all amounts left to private independent foundations are one hundred (100%) percent exempt from the federal gift and estate tax. For taxable estates over $2,000,000 the federal estate tax will take forty-nine (49%) percent and for taxable estates over $3,000,000 the federal estate tax will take fifty-five (55%) percent of every dollar. The tax exemption currently in the year 1999is $650,000 and will increase periodically until it reaches an amount of $1,000,000 for the exemption in the year 2006. It should also be noted that under the unlimited marital deduction all amounts from an estate left to a surviving spouse who is a United States citizen are all tax deferred. Pension Plans - Individual Retirement Accounts - Deferred Annuities and Other Income in Respect of a Decedent AssetsWhile pensions plans and deferred annuities are very beneficial investments during lifetime, when these assets are included in an estate that is subject to the federal estate tax, the tax results can be disastrous. Such an asset if included in a taxable estate may very well lose fifty (50%) percent or more of the value of the asset to the federal estate tax and then another thirty-three and one- third (33-1/3%) percent, more or less, to income taxes as the asset is paid out to beneficiaries. Designating a recognized charity as a beneficiary of such assets will totally avoid not only the federal estate tax, but will avoid all income taxes meaning that the charity receives one hundred (100%) percent of the value of the asset. If clients are considering giving to charity through an estate, these are the first assets that should be looked at. Charitable Remainder TrustsUnder such a trust an asset is transferred to the trust (donor gets current tax deduction based on remainder value of the asset), the client (and a spouse) then can receive income from the trust at a designated rate for lifetime or a period of years, and after that the balance in the trust passes to charities named. All capital gains on the transfer of the assets to the trust are avoided and also all estate taxes that would have been due are also avoided. Pooled Income Funds and Gift AnnuitiesThe client who does not wish to be burdened with the detailed requirements and tax returns required by the charitable remainder trust can use a pooled income fund or a gift annuity to accomplish the same results. They are offered by many schools and large charities where the donor wishes to name that particular charity as the ultimate beneficiary.
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