You may be starting to review your tax projections to determine an ideal level of charitable giving at the end of 2024. Before you start writing checks, take a moment and consider the many types of assets that frequently make even better gifts, such as marketable securities.
Gifts of appreciated stock to a donor-advised or other type of fund at the Community Foundation is one of the most tax-savvy ways to support favorite charitable causes because capital gains tax can be avoided.
As is the case with a cash gift, the Community Foundation will provide a receipt for tax purposes, and the gift of stock will be valued at the shares' fair market value on the date of transfer. When the Community Foundation sells the shares, the proceeds flow into your funds without any reduction for capital gains taxes. This is because the Community Foundation is a 501(c)(3) charitable organization and therefore does not pay income tax. That would not have been the case, however, if you had sold the stock first and then transferred the proceeds to your fund; you would owe capital gains tax on the sale, and if you have held the stock a long time and it's gone up significantly in value, the capital gains hit can be big.
Another helpful option would be the Qualified Charitable Distribution ("QCD"), a very smart way to support charitable causes. If over 70 ½, you can direct up to $105,000 from your IRA to certain charities, including a field of interest, designated, unrestricted, or scholarship fund at the Community Foundation. If subject to the rules for Required Minimum Distributions (RMDs), QCDs can count toward those RMDs, resulting in avoiding income tax on the funds distributed to charity. Plus, leaving your IRA to your fund through a beneficiary designation is a very tax savvy move, too.
Two other options could be real estate and/or life insurance. If the details of transferring those type options interest you, we can discuss and provide that information to you. There are many attractive options, worth taking some time to consider.
Call me at our office at 501-372-1007 or email me at [email protected]. Take case of this business before the end of year rush! Then you will have more time to enjoy the holidays that are just around the corner!