The complexity of many giving techniques requires that you consult with your legal or financial advisor. However, described here are some of the ways your charitable donations can accomplish your philanthropic and financial objectives.
If you would like to explore any of the charitable giving alternatives in greater detail, we would be happy to put you in touch with our advisors. Thank your for considering the American Forest Foundation.
Cash Gifts
Cash gifts are deductible up to 50% of a donor’s adjusted gross income (AGI) (income after certain adjustments are made, but before standardized and itemized deductions, and personal exemptions, are made.) All charitable gifts can result in state income tax savings and reduce the size of the donor’s taxable estate as well.
Gifts of Securities
Gifts of securities such as stocks and bonds can be more advantageous than gifts of cash in situations where the securities have appreciated in value, because the donor avoids paying capital gains taxes. A gift of appreciated securities can provide up to 15% more spending power to a charity than selling the asset and contributing the proceeds. However, deductions for gifts of appreciated securities such as stocks are usually limited to only 30% of AGI, with a five-year carry forward of any excess.
Outright Gifts of Real Estate
An outright gift of real estate could provide you with current income tax deduction (subject to the same AGI limitations applicable to gifts of securities) and enable you to avoid any capital gains taxes that might have been due upon the sale of the property.
Gift of Conservation Easement
You can restrict the future use and development of your real estate by donating a permanent conservation easement to a local land trust. The donor of a qualified conservation easement is entitled to a tax deduction for the diminution in the value of his or her land resulting from the donation, as substantiated by an appraisal. The first step is to find a land trust that will “hold” the easement. If you wish, we could assist you in this process. The easement holder is responsible for enforcing the easement by making periodic inspections of the property to ensure that the dictates of the easement agreement are being followed.
At the federal level, you may deduct up to 50% of your AGI in the year you contribute the conservation easement. Any amount left over may be carried forward and deducted over the next 15 years. Additionally, if you are a qualified farmer or rancher in the year in which the easement is donated, the conservation easement deduction is allowed up to 100% of your AGI.
Gift of a Personal Residence or Farm with a Reserved Life Estate
You may donate your property or personal residence to AFF and reserve the right to live on the property/residence and continue to operate it and pay the expenses for the rest of your life. You would even be permitted to lease the property and make improvements in consultation with AFF. This would result in a current income tax deduction (discounted to present value based on your age) and remove the property from your estate. You would also avoid any capital gains taxes that would have been due upon a sale.Although you will be responsible for maintenance, taxes, and insurance, the charitable deduction may be particularly helpful during years of high income.
Life Income Arrangements: Charitable Gift Annuity
Life income arrangements through planned giving can increase your income, save on taxes, and provide future support for AFF Life income gifts are particularly attractive when you want to offer a large contribution but the uncertainty of your future needs precludes an outright gift. In addition, the use of appreciated stocks, bonds, or real estate to make a life income gift will avoid all or a part of the capital gains that would otherwise be due upon sale.
Life income arrangements provide payments for the life of one or more beneficiaries, a charitable deduction for the donor, and the remainder upon the termination of the plan left to AFF. Planned gifts provide four possible benefits: increased income, an income tax deduction, deferral of capital gains tax when appreciated property is used to fund the gift, and removal of the funding assets from your estate.
The charitable gift annuity is the simplest, and often the most beneficial, life income gift. An annuity is a contract that provides for you to receive regular payments of a fixed amount for the rest of your life. In exchange for a transfer of cash, stock, or real estate, American Forest Foundation is able to guarantee payments for life. The payments under the annuity contract are calculated based on the age of the beneficiaries, the value of the property donated, and current interest rates. Annuities are limited to one or two beneficiary lifetimes. The remainder of the annuity passes to charity upon termination.
You would be entitled to a current income tax deduction based on the difference between the property's fair market value and the value of the annuity, and capital gains taxes would be deferred. Deferred gift annuities can even supplement retirement income.
Bequests
Finally, you could leave a gift to American Forest Foundation through your will.
For further information please contact:
Laura Tuel at (202) 463-2585 or ltuel@forestfoundation.org.
