40% off! If this sign were up at your favorite store, it would definitely get your attention.
Charitable gifts made during lifetime are generally preferable to charitable gifts made by will, for fairly simple tax reasons.
A charitable bequest is deductible for federal estate tax purposes, but is not deductible for income tax purposes.
A gift made during lifetime is out of the donor’s estate for estate tax purposes, but also provides the donor with a deduction for income tax purposes.
Thus, for donors in 40% combined federal-state income bracket, a charitable gift during lifetime is 40% less expensive than a similar gift during will.
I work with Iowa nonprofits, and the donors who fund them — more here. But today, Friday, is perhaps a particularly good reminder about the importance of charities and charitable giving.
My favorite hour of the week happens on Friday — from 9 a.m. to 10 a.m., Iowa time. Every week the great Tom Ashbrook of NPR‘s On Point summarizes the news of the week. It’s just a great news show, and especially on Friday, as it catches me up on anything I’ve missed during the week.
Later today, Monica and I will walk down from our new place to Fry Fest, to join everyone in a huge pep rally. Whether you are a Hawkeye, or a fan of another team, the kick off of a college football season is so much fun!
Gordon Fischer Law Firm, P.C. is dedicated to promoting and maximizing charitable giving in Iowa. Gordon can be reached by phone at 515-371-6077; by email at email@example.com; and through his website at www.gordonfischerlawfirm.com.
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For farm operators, gifting grain directly, rather than selling the grain and making a gift from the proceeds, may provide very significant tax savings. Five keys:
- Contributing grain allows Donor to avoid sale of the commodity as income, while the production costs may well still be deductible. Reducing taxable income may provide advantages such as minimizing or eliminating self-employment tax and reducing AGI.
- Be sure the gift is grain commodities, not a grain storage receipt, which could be considered a cash-equivalent-gift.
- The Charity must be able to demonstrate “control and dominion” over the gifted property. Therefore, Donor cannot offer Charity any guidance as to when to sell the commodity.
- There should be no prior sale commitment made before the gift of grain is made, as, again, Charity must be in control of the timing of the sale. After the grain ownership is transferred, the Charity assumes all costs and risk of a down market.
- Many grain farmers annually certify or document bushels of production with a Farm Service Agency for purposes of enrolling that grain production in various agriculture subsidy programs. Potential donors should be urged to accomplish FSA certification before making gifts of grain commodities.