You could sell your horse and donate the proceeds; then we’re talking about a cash gift. But if you’ve owned the horse more than two years, the horse could be treated as a long-term capital asset. [Generally speaking, you only have to own property for more than one year to claim long term capital gain status, but horses must be owned for two years.]
Basic requirement
To receive a deduction, make certain the organization you choose to receive your horse is certified by the IRS as a charitable organization. You can check out the organization with a search on the IRS website here.
The concept of “related use”
Has the value of your horse increased or decreased since you purchased the horse? If the value has decreased, then the use of the horse by the nonprofit to which you donated the horse does not matter. If the value of your horse has increased, however, the concept of “related use” kicks in.
If appreciated property is considered related to the nonprofit’s exempt purpose, the deduction is based on fair market value and available to the extent of 30% of the donor’s adjusted gross income. If property is considered unrelated to the public charity’s exempt purpose, the deduction is based on the lesser of fair market value and cost basis, and is available to the extent of 50% of donor’s adjusted gross income.
So, for example, if you donate your horse to a youth homeless shelter, so the youth can care for the horses, my best guess would be that you can’t deduct the full value, as the shelter’s charitable purpose does not really have anything to do with horses. Donating to a therapeutic horse riding center I believe would allow full deduction since horses are obviously used to fulfill the nonprofit’s major charitable purpose.
Valuation requirements
Here’s a simple explanation of IRS record keeping rules for the charitable deduction:
Gifts of less than $250 per donee — you need a cancelled check or receipt
$250 or more per donee — you need a timely written acknowledgement from the donee
Total deductions for all property exceeds $500 — you need to file IRS Form 8283
Deductions exceeding $5,000 per item — you need a qualified appraisal completed by a qualified appraiser
I provide details on substantiation requirements in a blog post here.
Conclusion
A gift of a horse of course could provide helpful tax benefits. But proceed with due care.
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 atgordon@gordonfischerlawfirm.com; and through his website at www.gordonfischerlawfirm.com.
Please consider Gordon’s request for you to sign up for his free e-newsletter and encourage others to do the same. A quick and easy sign-up is here.Also, please forward the subscription page to any person or group you think might be interested.
Also, be social with Gordon. Please “like” Gordon Fischer Law Firm’s Facebook page, follow Gordon on Twitter, and connect with Gordon on LinkedIn and Google+. Links:
https://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.png00Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2015-05-02 20:38:352020-05-18 11:29:00The Kentucky Derby was run today: what are the tax consequences of the gift of your horse to charity
A gift to a qualified charitable organization may entitle you to a charitable contribution deduction against your income tax. But there are record keeping requirements to claim the charitable deduction.
Substantiation of gifts of $250 or more
For any contribution of either cash or property of $250 or more, a donor must receive contemporaneous written acknowledgment from the donee.
Requirements of written acknowledgment
The written acknowledgment must include:
The date of the gift and the charity’s name and location.
Whether the gift was cash or a description of the noncash gift.
A statement that no goods or services were provided by the organization in return for the contribution, if that was the case.
A description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution.
A statement that goods or services, if any, that an organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case.
Contemporaneous
For a written acknowledgment to be considered contemporaneous with the contribution, a donor must receive the acknowledgment by the earlier of: the date on which the donor actually files his or her individual federal income tax return for the year of the contribution or the due date (including extensions) of the return.
Let’s simplify over the next few posts. I’ll really break these rules down to the most basic elements.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.png00Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2015-04-20 21:43:062020-05-18 11:29:00Substantiation of gifts of $250 or more, tax tip 5/365
The Kentucky Derby was run today: what are the tax consequences of the gift of your horse to charity
Taxes & FinanceIntroduction
You could sell your horse and donate the proceeds; then we’re talking about a cash gift. But if you’ve owned the horse more than two years, the horse could be treated as a long-term capital asset. [Generally speaking, you only have to own property for more than one year to claim long term capital gain status, but horses must be owned for two years.]
Basic requirement
To receive a deduction, make certain the organization you choose to receive your horse is certified by the IRS as a charitable organization. You can check out the organization with a search on the IRS website here.
The concept of “related use”
Has the value of your horse increased or decreased since you purchased the horse? If the value has decreased, then the use of the horse by the nonprofit to which you donated the horse does not matter. If the value of your horse has increased, however, the concept of “related use” kicks in.
If appreciated property is considered related to the nonprofit’s exempt purpose, the deduction is based on fair market value and available to the extent of 30% of the donor’s adjusted gross income. If property is considered unrelated to the public charity’s exempt purpose, the deduction is based on the lesser of fair market value and cost basis, and is available to the extent of 50% of donor’s adjusted gross income.
So, for example, if you donate your horse to a youth homeless shelter, so the youth can care for the horses, my best guess would be that you can’t deduct the full value, as the shelter’s charitable purpose does not really have anything to do with horses. Donating to a therapeutic horse riding center I believe would allow full deduction since horses are obviously used to fulfill the nonprofit’s major charitable purpose.
Valuation requirements
Here’s a simple explanation of IRS record keeping rules for the charitable deduction:
Gifts of less than $250 per donee — you need a cancelled check or receipt
$250 or more per donee — you need a timely written acknowledgement from the donee
Total deductions for all property exceeds $500 — you need to file IRS Form 8283
Deductions exceeding $5,000 per item — you need a qualified appraisal completed by a qualified appraiser
I provide details on substantiation requirements in a blog post here.
Conclusion
A gift of a horse of course could provide helpful tax benefits. But proceed with due care.
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 gordon@gordonfischerlawfirm.com; and through his website at www.gordonfischerlawfirm.com.
Please consider Gordon’s request for you to sign up for his free e-newsletter and encourage others to do the same. A quick and easy sign-up is here. Also, please forward the subscription page to any person or group you think might be interested.
Also, be social with Gordon. Please “like” Gordon Fischer Law Firm’s Facebook page, follow Gordon on Twitter, and connect with Gordon on LinkedIn and Google+. Links:
Facebook:
https://www.facebook.com/gordonfischerlawfirm
Twitter:
https://twitter.com/FischerGordon
LinkedIn:
https://www.linkedin.com/in/fischergordon
Google+:
https://plus.google.com/117606850043111451177/posts/p/pub
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Substantiation of gifts of $250 or more, tax tip 5/365
Taxes & FinanceHappy Monday to all. Here’s a new tax tip.
A gift to a qualified charitable organization may entitle you to a charitable contribution deduction against your income tax. But there are record keeping requirements to claim the charitable deduction.
Substantiation of gifts of $250 or more
For any contribution of either cash or property of $250 or more, a donor must receive contemporaneous written acknowledgment from the donee.
Requirements of written acknowledgment
The written acknowledgment must include:
Contemporaneous
For a written acknowledgment to be considered contemporaneous with the contribution, a donor must receive the acknowledgment by the earlier of: the date on which the donor actually files his or her individual federal income tax return for the year of the contribution or the due date (including extensions) of the return.
Let’s simplify over the next few posts. I’ll really break these rules down to the most basic elements.
Short video clip: charitable giving & saving taxes
News, Taxes & FinanceHere’s me on WHO-TV talking about charitable giving and saving on taxes:
http://whotv.com/2015/04/14/tax-tips-for-2015/
Video clip is only about 4 minutes. Watch and enjoy.