Our team loves to share great reads and yesterday a piece by Ben Steverman on Bloomberg.com was circulated. Be sure to take a few minutes to read the article but the overall premise he makes is to get your deductions this year because next year’s deductions may be less valuable. Of course, we were most interested in the portion of the article on charitable giving.
Mr. Steverman recommended doubling up gifts to a charity this year in order to take next year off. We have an even better idea. What if we showed you how to combine your charitable contributions for the next several years, donate that amount in 2016 and take full advantage of the charitable income tax deduction now?
It’s easy. Create a Donor-Advised Fund.
Let’s use John and Nancy as an example. On an annual basis John & Nancy budget $50,000 in charitable gifts. Currently, John & Nancy are sitting on a piece of stock that has appreciated to well over $500,000 with a very low cost basis. If they were to sell the stock outright, they would pay a substantial amount in capital gain tax. However, if they donate $150,000 of that stock to a Donor-Advised Fund (DAF), they not only avoid the capital gain tax but also fund their charitable giving for the next three years while realizing a $150,000 charitable income tax deduction.
Your gift doesn’t have to be stock. Donor-Advised Funds can accept all types of assets from cash and marketable securities to business interests, real estate, artwork and much more.
No matter what side of the presidential race you fell on, most everyone will agree they would rather invest their money in their own favorite charitable causes than give it to Uncle Sam.