Giving

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WHY give?

First and foremost, God wants us to give because it shows that we recognize he is truly the Lord of our lives.

JAMES 1:17: Every good and perfect gift is from above, coming from the Father of the heavenly lights, who does not change like shifting shadows. (NIV)
 
Everything we own, everything we have comes from God. So when we give, we simply offer him a very small portion of all the abundance he has already given to us. Giving is an expression of our thankfulness and praise to God! It comes from a heart of worship. For everything we give already belongs to him! We just hold it in trust, until the day when we will be held accountable to God for the way we managed our allotments.
 

We are blessed when we give.

ACTS 20:35: …remembering the words the Lord Jesus himself said: “It is more blessed to give than to receive.” (NIV)
 
God wants us to give because he knows how blessed we will be as we give generously to him and to others. Giving is a kingdom principle; giving brings even more blessing to the giver than to the recipient.
 
When we give freely to God, we receive freely from God.
 
LUKE 6:38: Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you. (NIV)
 
PROVERBS 11:24: One man gives freely, yet gains even more; another withholds unduly, but comes to poverty. (NIV)
 
God promises that we will be blessed over and over and above that which we give and also according to the measure that we use to give. But if we hold back from giving with a stingy heart, we hinder God from blessing our lives.
 
We don’t give to a church. We don’t give to the pastor. We give our offerings to God alone.
 

How much should we give?

In the Old Testament, God instructed believers to give a tithe, or a tenth, because this 10% represented the first or most important portion of all that they had. The New Testament does not suggest a certain percentage for giving, but simply says for each to give “in keeping with his income.” With this, let your heart be your guide as God loves a cheerful giver who has a grateful heart and an attitude of joy when we give to his purposes.
 

Ways to Give


Regular Giving

Regular giving is the expression of gratitude through the contribution of assets for the immediate benefit of Mukilteo Presbyterian Church, whether it is for general fund purposes or designated to one of our ministries. Everything we do at Mukilteo Presbyterian Church happens because of the support of our members, attendees, and friends. Without their tithes and offerings it would be impossible to provide the ministries we all enjoy that are touching and changing peoples’ lives every day. Those who wish to honor God through our ministry may utilize any of the following convenient ways to give:

  • You can give cash or check during any one of our two Sunday worship services.
  • You can give by mailing your gift to the church office during the week.
  • You can give by using your bank’s online bill pay service. Contact your bank.
  • You can give through Automatic Bank Debit option. This allows you to make monthly gifts. Contact your bank.

MPC does not encourage those who wish to make a contribution to enter into debt in order to do so. Debt incurrence is not biblical

Planned Giving

Planned giving is a way of providing for a gift to the Church that uses tax, financial, and estate planning techniques to enable a gift commitment to the Church that may also provide tax and financial benefits for the donor. Many planned gifts occur through donor’s wills, living trusts or beneficiary designations from retirement plans, life insurance, and financial accounts. Such gifts may save estate taxes and other costs. Several gift plans pay donors income for life, and provide income tax charitable deductions and possible capital gains tax savings. Gifts of real property are also frequently used, including the gifting of a personal home with the donors retaining lifetime use and occupancy. It important to inform Church Session of any planned gift, especially for gifts of real property to be sure the gift complies with MPC’s Gift Acceptance Policy. In addition, it is strongly recommended that you consult with your estate planning attorney in the preparation of your will and with other skilled professionals in your overall financial and estate planning matters.

Ways to Establish Planned Gifts

  • Through Will Bequests and Living Trusts

Will Bequests

A will bequest is the most common of all planned gifts. It is perhaps the most profound way to express ones strong belief in the Church and it ministries in God’s work by insuring that those ministries are financially strong and viable for many years beyond one’s own lifetime.

Suggested bequest language for Wills and Living Trusts:

The following language may aid you and your attorney in preparing your bequest for the benefit of Mukilteo Presbyterian Church:

I give, devise and bequeath to Mukilteo Presbyterian Church, located at 4514
84th Street SW, Mukilteo, Washington, a Washington non-profit corporation
and organized in accordance with the laws of the State of Washington for the
purpose of supporting Mukilteo Presbyterian Church.

a. The sum of $________________.

B.The following described property: _____________________________.

…and/or

C._____ % of the balance, residue, and remainder of my estate.

Some suggested types/uses of bequests for bequest language:

  • to be used for the greatest need at the time the bequest is received.
  • for a specific designated purpose or to a specific ministry.
  • to a church endowment fund, if one exists.

Please note that if you select a specific purpose for your gift, you may want to include the following sentence with your request:

“If circumstances should change at some future time, rendering the original designated use of this bequeath impractical, unwise or inappropriate, then the church shall use the fund to further the objectives and purposes of Mukilteo Presbyterian Church, giving consideration to my interest as evidenc- ed by the purpose described above.”

  • Financial Accounts
  • Retirement Accounts
  • Life insurance Policies
  • Charitable Gift Annuities
  • Charitable Remainder Trusts
  • Charitable Lead Trusts
  • Pooled Income Funds
  • Life estates: Give a Home With Lifetime Possession

What to Give

  • Cash
  • Financial Accounts
  • Retirement Accounts
  • Life Insurance Policies
  • Publicly Traded U.S. Stocks and Bonds
  • Real Estate
  • Life Estates: Give a Home but Keep Lifetime Possession
  • Tangible Personal Property

Financial Accounts – Overview

Individuals who have financial accounts at banks, and credit unions – such as savings, checking, and certificates of deposit – generally may designated that their deposits be paid to Mukilteo Presbyterian Church at their passing. The designation can be revoked any time during the individual’s lifetime, and does not affect the individual’s control over the funds in the account during their lifetime. Please ask the manager at your financial institution how these beneficiary designations may be accomplished. Typically accounts with such provisions are referred to as P.O.D. (pay on death) accounts.
 
Brokerage accounts. If you have stocks, bonds or mutual fund shares in brokerage accounts, it is usually possible to name the Church a T.O.D. (transfer on death) beneficiary. You would continue to maintain full control over the account during your lifetime. Please contact your broker for the necessary forms and guidance on how to make this provision for your brokerage account.
 
Other types of financial accounts: Almost any arrangement that provides for a beneficiary designation can be used to make a gift to the Church, including such financial accounts as 401(k) and 403(b) plans, or Individual Retirement Accounts. You may also be able to make the Church the beneficiary of commercial annuities, deferred compensation, or life insurance policies. As with other accounts, please contact your plan administrator to determine the forms and process required to make or revise a beneficiary designation.
 
Many members and friends have chosen to provide for a gift to the Church by designating the Church as a beneficiary on a financial account. These gifts typically avoid probate and may also save estate taxes.
 

Retirement Accounts

Estate gifts from retirement accounts: A combination of federal income taxes and estate taxes can significantly diminish the retirement savings accounts of many individuals after their passing. Where estate planning to provide for heirs involves a variety of assets, it may be helpful to know that all taxes on Individual Retirement Accounts (IRA’s), and other retirement accounts, can be avoided on amounts left to Mukilteo Presbyterian Church, whereas those same assets left to heirs may incur significant taxes involving over half the asset value. Retire ment accounts can also be left to a Charitable Remainder Trust to fund the establishment of a gift annuity that pays income to family members during lifetime with the balance later benefiting the Church.
 
How to make an estate gift from a retirement account: To include the Church as a beneficiary, please contact the trustee or custodian of your retirement account and request a beneficiary designation form. You can name the Church to receive all or part of the account, or a contingent beneficiary in the event that the primary beneficiary passes on before you. If you are married, your spouse’s written consent will normally be requires to make a charitable gift of retirement benefits. Another option is to make the Church contingent beneficiary of a retirement plan, but then granting to the heirs the right to disclaim (decline) part or all of their share, which would then pass to the Church free of taxes.
 
Can you still make lifetime gifts from IRA’s? For a limited period of time, The Pension Protection Act of 2006 enabled IRA owners over the age of 70 1/2 to make transfers, in the years 2006 and 2007 only, to qualified organizations, including the Church – with favorable tax benefits. Up to $100,000 could be given in this manner. However, this opportunity has now expired. It is unclear whether Congress will extend the lifetime IRA gift opportunity in the future. Eligible donors should consider this opportunity if an extension or future similar legislation provides for gifts made directly from an IRA to a charity during the lifetime of the IRA account holder. Be sure to check with your CPA on the most current tax legislation.
 
Retirement accounts, such as 401(k) plans, 403(b) plans and individual retirement accounts (IRA’s), are generally viewed as the best assets to leave through an estate plan to charitable organizations. When these types of accounts are the asset chosen to benefit loved ones, (versus a charitable organization) a combination of federal and state estate taxes, income taxes and even federal generation-skipping transfers taxes can significantly impact the net benefit, leaving little remaining for the intended loved ones.
 

Life Insurance Policies

A gift of a life insurance policy: Circumstances may indicate that the initial purpose for establishing the life insurance policy may have changed over the years. For example, it may be that there is no longer a necessity for retaining a $50,000 policy purchased many years ago. Let’s assume further that the cash surrender value of your policy is $20,000. A gift planning opportunity might include a transfer of the policy to the Church, but you would continue to cover the amount of the premiums due in a way that might also enable you to continue to receive the charitable deduction for the amount of the continuing premium payments. In addition, you may also be entitled to an income tax charitable deduction, and – if for example you are in the 28% tax bracket – a possible reduction in taxes of $5,600.00. Upon your passing, the full $50,000 in proceeds will come to the Church.
 
Revocable beneficiary designations: Sometimes individuals who have already made their wills decide that they now wish to include the Church in their estate plans, but may prefer not to revise their estate planning documents. A life insurance policy can provide a simple, effective opportunity. An individual can name the Church as the beneficiary of part or all of a life insurance policy. This is accomplished through contacting your insurance provider and requesting the forms required to make beneficiary designations.
 
Gifts of a new policy: some situations have arisen where, as part of an individual’s financial and estate planning, the individual purchases a new policy, naming the Church as the owner and beneficiary of the policy. Life insurance allows you to make a substantial (leveraged) gift at a very affordable cost, because annual premium payment amounts may be deductible as additional charitable gifts.
 
Wealth replacement insurance: Life insurance, possibly purchased through an irrevocable life insurance trust, can replace in your estate, stocks, bonds, real estate or other assets you contribute to a lifetime charitable remainder trust or charitable gift annuity to benefit the Church, providing gifts both to family or other organizations, and the Church. The cost of premiums may be reduced with tax savings and increased income derived from these gift arrangements.
 
Gifts of life insurance are an additional option for charitable giving. While life insurance is not the answer to every financial planning and estate planning problem, the possibilities for using life insurance are plentiful and can serve to meet various needs. Ownership rights in a life insurance policy are often readily transferable and the gift will not change one’s current standard of living in any way.
 

Publicly Traded U.S. Stocks and Bonds 

Giving a gift to the Church using appreciated securities may provide an additional tax benefit for those donors who give appreciated securities that they have owned more than one year:
 
They are entitled to income tax deductions, just as with gifts of cash, for the current fair market value of their securities – not just what they paid originally. For outright gifts, they save again by avoiding capital gains taxes they would have owned if they sold the securities. Donors receive, in effect, a deduction based on the untaxed profit. In addition, donor’s with large estates also may save on estate taxes. These tax savings often enable donors to increase the size of their gifts, and are available for contributions of: common and preferred stock, corporate bonds, and mutual fund shares.
 
Illustration of potential tax benefits* from gifts of stock that has doubled in value:
 
Tax bracket   25%   28%   33%   35% 
Current value of securities  $1,000   $1,000   $1,000   $1,000 
Income tax savings  $250   $280   $330   $350 
Capital gains taxes saved  $75   $75   $75   $75 
Total taxes saved/avoided  $325   $355   $405   $425 
Publicly traded securities may be one of the better assets to use in making outright gifts or establishing planned gifts for the Church.
 
From a tax standpoint (currently), publicly traded securities that have appreciated in value, and that have been owned more than one year, can be a tax-efficient asset to use to make a charitable gift, whether as an outright gift, or to establish a planned gift.
 
For planned gifts, appreciated securities contributed to a Pooled Income Fund avoid capital gains taxes entirely; with gift annuities, donors avoid reporting a large portion of their capital gains, and the rest can be reported in annual installments over their life expectancies (assuming the donor is also a recipient); and with Charitable Remainder Trusts (CRT), there is no capital gains tax when the donor transfers the appreciated assets to the CRT, and no tax when the trustee sells the appreciated assets and reinvests the proceeds. Depending on the types of income earned by the trust, some of the recipients’ trust payments may be taxed a long- term capital gains.
 

Income Tax Deductions

The current value of appreciated securities held long-term (more than one year) is deductible, if transferred to the Church, up to 30% of adjusted gross income, with a five year carry over for excess deductions. Securities with short-term gain are deductible at cost basis, up to 50% of AGI.
 
Gifts of securities should be planned for maximum deduction value. Timing can be important. The tax deduction for a gift of actively traded securities is the average (mean between the highest and lowest quoted sales price on the date of the gift) daily price, not the value at the close. If donors have purchased stock of the same corporation at different times and different prices, they should gift the shares for which they paid the lowest price, retaining those having the highest cost basis. For shares held in a brokerage account, donors should specify what shares they wish to transfer to the Church; otherwise the IRS will apply the “first-in-first-out” rule – which may mean transferring shares with a high basis. The broker should provide written confirmation that the shares transferred were bought at the lowest price.
 
If you own stock that has gone down in value, it’s generally best to sell the stock and contribute the cash proceeds. In that manner, you would be entitled to both a capital loss deduction and a charitable deduction for a gift of cash.
 

When are Gifts of Stocks Deductible?

If Stocks are held in street name (by your broker), the gift is effective (deductible) on the date the transfer is noted on our account. If you have physical possession of stock certificates, the gift is effective on the date of delivery of the certificates in negotiable form to Mukilteo Presbyterian Church or its agent (the postmark date is the date of gift if the certificates are mailed).
 

Steps in Gifting Securities

Making a gift of securities requires following several steps. If stocks are held in street name/ by your broker, give the broker instructions as to which shares you wish to transfer and alert him or her to call our office immediately. Please notify our office personally as well. As explained previously, you should gift shares in which you have the lowest cost basis (that is, shares with the most capital gain). Your gift is complete, for tax purposes, on the date your stock is actually transferred into our account.
 
If you have the stock certificate in your physical possession, send the unendorsed certificates registered mail to our office. Enclose a cover letter outlining the purpose of your gift, along with a description of the issues and the number of shares and certificates. Send separately a signed stock power without filling in your name. (We can provide you with the forms.) This lets us sell the stock without having to go through the transfer process. Alternatively, you can hand-deliver the securities to the church office by previous arrangements with the Church Administratoe.

Mutual Funds

Mutual fund shares can be given to the Church with the same beneficial effect as listed and actively traded stock.
 
Thus, mutual funds shares bought by you eight or ten years ago – though they may be worth much more than you original cost – can be given without incurring any capital gains tax, if given outright, and for planned gifts, a spreading out of the capital gains tax over an extended period of time. Your deduction is the bid, or the “net asset value” of the shares, which is calculated each day, generally after the close of the stock market. If you decide to gift mutual fund shares, please notify us as soon as possible and send us a copy of your mutual fund statement. Transfers can take from two to six weeks, or more, to accomplish and we may need to work with you and your account manager to ensure that the gift is effective for the current calendar year.
 

Corporate Bonds

An individual can generally deduct the full fair market value of any corporate bonds you give to the Church as an outright gift, and the individual would not owe any capital gains tax on the appreciation. However, the rule is different if a sale or redemption of the bond would result in ordinary income. The amount that would have been taxable as ordinary income is not deductible. So the rules may change some depending on the corporate bond. Contact your broker-dealer if you wish to give corporate bonds and notify our office of your intentions.
 

Receipts/Substantiation Requirements

Securities worth less than $500 require a receipt from Mukilteo Presbyterian Church with a statement as to whether the donor received any goods or services as a result of the contribution. A gift of securities worth more than $500 requires both a receipt and completion of Section A of form 8283 by the donor.
 
If you are interested in making a gift of securities, please e-mail, call or write our office. We can advise you on our contact information, for your broker’s information, or if you do not have a broker, we can arrange one to handle the transaction for you.
 

You will need to share with us:

The name of the stock(s), the number of shares and their purchase price (basis), date of purchase, CUSIP number and your broker’s contact information for a transfer. If you intend to transfer mutual fund shares, we will need the contact information for your mutual fund account manager. We will also need a copy of your mutual fund statement. Please be advised that a transfer of mutual fund shares may require significant time to process.
 

Gifts of Real Estate 

A desire to make a gift to MPC can be achieved by using real estate. In addition to providing financial benefits for God’s work at Mukilteo Presbyterian Church other benefits may also include some or all of the following:
 
Reduced income taxes, reduced estate taxes, reduced property taxes, lower insurance and upkeep costs, avoidance of capital gains taxes, financial security for loved ones, increased lifetime income and if structured so, continued use of the gifted property during your lifetime.
 
Immediate gift: An immediate gift of appreciated real estate to the Church can generate tax benefits that will substantially reduce the after-tax cost of the gift. Generally a person who makes a gift of real estate held more than one year is entitled to an income tax deduction equal to the full value of the property contributed. In addition, the donor benefits from not having to incur capital gains tax on the profit that would have been taxable if the property had been sold. The donor may also save estate taxes because a lifetime gift of real estate to the Church removes the property from the estate. It may also be possible for you to give just a fraction or percentage of your property, with similar tax benefits for you.
 
Estate gifts: You may prefer to leave real estate to the Church through your will, retaining all the rights and privileges of ownership during your lifetime.
 
Life estates: If you own your own residence or vacation home you can also make an immediate gift of the property, obtain an immediate income tax deduction and still continue to use the property for the rest of your life, or for the lives of you and another.
 
Lifetime income: Real estate can be used to fund a Charitable Remainder Trust that will provide you or loved ones with lifetime income. But because you set up the trust now, rather than leave the property through your will, you are entitled to a substantial income tax charitable deduction.
 

Special Planning Needed

Gifts of real estate require careful planning. We hope you will contact the Church to discuss the potential that your real estate may have for making a meaningful contribution to the Church.
 
Real Estate gifts may make the most sense where: You own highly appreciated commercial real estate; you own a personal residence you would like to continue using the rest of your life, but which you would like to use as a gift to the Church; you own investment property that you wish to sell and reinvest for improved income potential and at the same time achieve your goal of making a gift to the Church. The choice of real estate as an asset to use when making a gift to MPC, while it involves a process of evaluation and careful planning, can be beneficial to the donor in many ways.
 
Income Tax Deductions. The current value of appreciated real estate held long-term (more than one year) is deductible by the donor, less any indebtedness, if transferred to MPC or other qualified organization. Deductions for real estate with short-term gain are limited to the donor’s adjusted basis.
 
Capital Gains Considerations. No gain is reportable when donors give real estate. The deduction is not reduced where depreciation deductions have been taken on commercial or investment real estate, unless the donor took accelerated depreciation that would have resulted in the recapture of ordinary income upon a sale. Capital gain must be reported from any bargain sale.
 
Date That Gifts Are Effective. The gift is effective for tax purposes on the date an executed deed is delivered to a charity or its agent. If the deed is mailed, the postmark determines the date of the gift.
 

Method of Transfer. Transfer of title of gifted realty is generally made by a Quit Claim Deed. All transfers of real property to MPC are subject to MPC’s Gift Acceptance Policies and the approval of Session. This process may necessitate a review by other professionals which may include environmental inspections/evaluations among other professional reviews.

Valuation of Gifted Real Property. The value for tax purposes will be established by a qualified independent real estate appraiser. The donor shall be responsible for obtaining the appraisal.
 

Special Gift Opportunities with Real Estate

Retained Life Estate (Occupancy). If you own a personal residence or vacation home you may be able to make a gift of the property, obtain an immediate income tax deduction and still continue to use the property for as long as you wish. How does this work? Simply give the property, but retain the right to use it for your life (a “life estate”). You can continue to live in your home and only after your death will the property pass for our benefit. By arranging this gift now, rather than in your will, you receive an immediate income tax deduction for the present value of our future right to receive the property.
 
Let’s look at how this type of gift might fit into the plans of a couple we’ll call John and Anita. John is 77 years old and Anita is 75. They are retired, but pay substantial income tax each year. John and Anita own the home that they live in (currently worth $500,000) and they finished paying off the mortgage ten years ago. John and Anita plan to live in their home for the rest of their lives. However, they also would like to make a significant gift to Mukilteo Presbyterian Church. John and Anita have decided to deed the home to the Church, retaining use of the home for his life and for Anita’s life. Based on their ages and other factors, John will receive an income tax deduction this year of about $200,000*.
 
Give just a Slice. You also can give a “partial interest” in property that you intend to sell and receive an immediate income tax deduction. For example, you could make the Church owner of a 10% interest in your vacation home. We would receive 10% of the proceeds when the vacation home is sold, and you will also avoid capital gains taxes on the portion gifted to the Church.
 
In Addition, you would be entitled to a charitable income tax deduction for roughly 10% of the property’s value.
 
Keep Lifetime Income. An ideal way to use real estate to accomplish your financial objectives while supporting the Church is to set up a Charitable Remainder Unitrust (CRUT). What is a unitrust? Basically it is a trust in which you irrevocably place the property, but retain a specified income (an annual percentage of the trust value as valued annually), usually for life. At the end of the trust, the trustee distributes the property to the Church. But because you set up the trust now, rather than leave the property through your will, you are entitled to a substantial income tax charitable deduction. By setting up a unitrust, you can:
 
  • Establish an income for life – one that can grow with inflation;
  • Reinvest a highly appreciated, low-yield asset, without incurring capital gains tax;
  • Reduce income taxes significantly and possibly save in estate taxes too;
  • Gain the investment and administrative services of a trustee;
  • Get rid of the financial and personal burdens of property management;
  • Make a magnificent gift to the Church.
Retire from Property Management. Walt is 72 and owns an apartment building worth $900,000 that he purchased many years ago for $300,000. He has taken straight-line depreciation deductions on the building and now has an adjusted basis of only $40,000. Walt plans to move to a retirement community and wants to sell the apartment building and invest for a good retirement income, even though he had long hoped that he could hold onto the property and then ultimately leave it to the Church as an expression of his gratitude.
 
In addition to his plans to move, now Walt would like to be free of the responsibilities of managing his property. But capital gains taxes would take $115,000* of his profit if he were to sell the property outright. This type of situation presents an opportunity for a gift plan that would meet all of Walt’s needs: To give a gift to MPC, maintain an income stream during his retirement years, and even to provide for his wife Shelly as well.
 
Walt can transfer the apartment to a Charitable Remainder Unitrust, set up with the Mukilteo Presbyterian Church, that pay him and his wife Shelly, age 70, 5% of the value of the trust each year for the rest of their lives. The $115,000* capital gains tax won’t come due when the trustee sells and reinvests, so Walt and Shelly will begin receiving trust income based on the full $900,000 – about $45,000 a year. Based on their ages and other factors, Allen also will receive a charitable deduction of about $348,000.* To summarize, Walt has:
 
  • Established a lifetime income for himself and Shelly;
  • Reinvested a highly appreciated asset without incurring capital gains tax, which would have included $600,000 taxed at a 15%* rate an $240,000 taxable at 25%* under depreciation “recapture” rules;
  • Reduced their income taxes significantly (the $348,000 gift will be deductible up to 30%* of The couple’s adjusted gross income, with a five-year carryover for any excess deductions);
  • gained the investment and management services of a trustee;
  • Put an end to ceaseless phone calls from tenants;
  • Help to provide ultimate support for the Church’s core activities.
Walt and Shelly’s plan would work equally well for people who own office buildings or undeveloped real estate and wish to sell and reinvest without paying capital gains taxes. For land that does not produce income (such as a vacant lot) the unitrust would probably be arranged so that income payments are postponed until after the trustee sells the property.
 

Flip Unitrusts Make Sense with Real Estate. Donors who fund trusts with real estate, closely held stock and other nonliquid assets often use a net-income or net-income with make-up (provisions) unitrust (a “NIMCRUT”), which permits the trustee to avoid or postpone income payments prior to the sale of the trust assets. Once the property is sold, however, most donors prefer the fixed percentage payments offered by a straight unitrust.

If you are interested in making a gift of real estate to Mukilteo Presbyterian Church, please e-mail, call our write our office. We will be pleased to advise you on the transfer and what you will need to share with us. We do have a gift acceptance policy in place and any gifts are subject to the approval of Session.
 
*Please be advised the tax rates and tax/deduction dollars indicated are for illustrative purposes and may not be current as congress is constantly changing the tax code and charitable giving laws. You are advised to consult with your accountant for current tax laws as they relate to your gift.
 

Tangible Personal Property Gifts – Overview

Gifts of tangible personal property, such as antiques, coins, paintings, stamps, etc. may have the same favorable tax consequences as gifts of appreciated stock or real estate. Special rule, however, limits income tax deductions for such gifts to the donor’s cost basis if the organization receiving the gift does not put the gift to some use related to its tax-exempt purposes. So if an individual desires to give a painting to MPC, and the Church sells the painting, the individual can deduct only what the individual paid originally for the painting. The IRS requires the donor to obtain a qualified appraisal where the deductions claimed exceed $5,000.
 
Important: Estate tax charitable deductions will not be reduced when you leave collectibles to the Church through your will or revocable living trust, even if they are not put to a related use.
 
Another gift option may be to transfer valuable artwork or other items to a Charitable Remainder Trust where the valuable item would be sold by the trust so that the investments in the trust could provide lifetime income, and possibly receive tax benefits with regard to any capital gain.
 
Please note that gifts of art, collectibles and other tangible personal property require careful planning and coordination with our office, and may require the involvement of the donor’s own attorney and/or accountant and qualified appraiser.
 
Gifts of collectibles and other personal property (disregarding intangible assets such as stocks, bonds and mutual funds) can be attractive, but they need careful planning, both from a practical and a tax standpoint. The most important tax rule, as stated earlier, is that deductions cannot exceed the donor’s cost basis if the charitable organization does not put gift items to a use that is related to its mission. Related use may not be important however, where the gift item is not highly appreciated or has gone down in value.
 
If a charity does not certify that an item valued at more than $5,000 is a related use asset and disposes of the property in the year of the gift, the donor’s deduction is limited to the donor’s cost basis. Further, if the charity disposes the property within three years, the donor must Include, as ordinary income in the year of disposition, the difference between the basis and the amount originally claimed. The deduction limitation or recapture will not apply if the charity certifies in a written statement to the IRS that either (1) the property’s use was substantially related to the donee’s exempt purpose, describing how the property was used and furthered the exempt purpose or (2) at the time of the gift, it was intended that the property would be used in a related manner, describing how such use become impossible or infeasible to implement.
 
Valuation poses potential pitfalls for donors who make gifts to charity of artworks, antiques, etc. – and is a constant bone of contention between taxpayers and the IRS agents who are seeking to boost the tax bills of donors, both living and dead. The IRS Advisory Panel, a 22-member group of art museum directors, curators and art dealers, assists the IRS in valuation of artworks valued at more the $20,000. Evaluations are based largely on 8 x 10-inch photographs. When a donor and the IRS cannot agree on the value of a particular artistic work, the piece must be appraised by the panel.
 
The IRS has a special publication (Pub. 561) on the valuation of gifts of property, including extensive guidelines on collections, household goods, used clothing, jewelry, paintings, antiques, works of art, boats, aircraft, vehicles, and inventory. Qualified appraisals are required where deductions claimed exceed $5,000.
 

Special Rules for Cars, Boats, and Airplanes

Under the American Jobs Creation Act of 2004, a donor’s vehicle deduction will be the charity’s sale price, unless the charity chooses to keep the vehicle. Exception: The deduction claimed is $500 or less. The donor’s receipt must show the amount the charity received for the car at any auction. Note, however, that most Americans do not itemize, and may still donate cars out of pure generosity!
 
If you are interested in making a gift of tangible personal property to the Church, please mail, call, or write our office. As always, tax laws are continually changing and the foregoing may not be the most current information for you to rely upon. You are encouraged to consult with your personal accountant for the most current gift laws affecting tangible personal property.