What to Give

Gifts of Cash

The resulting reduction in income taxes payable lowers the net cost of the gift. If you are subject to state and/or local income taxes as well as federal, the combined marginal rate (after the federal deduction for those income taxes paid) should be taken into consideration in determining the gift’s net cost.

If you don’t usually itemize deductions, you may want to consider it for any tax year in which you make a sizable charitable donation. One technique used by people who have few itemized deductions is to alternate between years in which they take the standard deduction and make few charitable gifts, and the years in which they give double their desired annual philanthropic support and shift to itemizing.

Beware of the annual limitation on the use of charitable deductions claimed for gifts to public charitable organizations, which for any specific year is 50 percent of your adjusted gross income (AGI) for cash gifts. Any unused deductible amounts can be carried over and used for as many as five additional years, if necessary.

If you predict that your estate will be subject to estate tax at your death, keep in mind that you receive a federal gift tax charitable deduction for the value of gifts of cash made during your lifetime. Since the value also is removed from your future estate, it completely eliminates the federal estate tax. This savings reduces the net cost of your charitable gifts.


For cash gifts of $250 and more, donors must have written confirmation from the charitable donee, as canceled checks are no longer sufficient proof of a deductible gift.

Gifts of Life Insurance 

Life Insurance can be a tool for many purposes. For example, it can provide security and liquidity for a family when a premature death occurs. It also helps pay taxes and other expenses when a loved one dies. Many times the most satisfying uses for life insurance policies are connected with charitable giving.

Three examples of giving opportunities:

Mr. Gordon Jacobs was born in 1934. He married Sarah, his high school sweetheart, and helped her raise four children. In 1956 they started their own business and ran it successfully until 1991. In retirement, they traveled the world and spent a lot of their time visiting their children and grandchildren. Recently, Sarah died unexpectedly. While reviewing his future financial plans, Gordon felt he should do something with the life insurance policies he owned that would have provided for Sarah if he had died prematurely. His children have careers and have been taken care of in his estate plan. His initial thought was to cash the policies in, but he was told by his tax advisor that he could get a tax deduction if he donated them to a charitable organization. They had supported TBRI over the years. While talking to the staff at TBRI, he learned that he could help secure the future of medical research on Florida’s west coast. Gordon transferred the ownership of the policies to TBRI, thus creating an endowment gift in Sarah’s name.

Peter and Ruth Edwards spent their entire careers in science education. Peter was a professor at a local university and Ruth was a grade school teacher for over 30 years. They raised two children, both of whom are now business owners. They were good savers over the years and they accumulated a good sum of money for retirement. Peter and Ruth, with professional advice, established Irrevocable Life Insurance Trusts for their children. This guaranteed a sum of money, free of taxes to the children upon the death of Peter and Ruth. It enabled them to spend the money they had accumulated the way they wanted to. They were financially comfortable and while doing a review of their estate plan they concluded that they didn’t need their older, paid up life insurance policies. Their advisors told them that they could receive a substantial tax deduction if they gifted these policies to a charitable organization. They had been long time supporters of TBRI. With the help of their professional advisors, the Edwards gifted the paid up insurance policies to TBRI to support the future of medical research.

Robert Mitchell is a widower and owns several fixed and variable annuities. While reviewing his financial situation, his tax advisor told him that he could make a significant gift to a charitable organization of his choice without spending any current dollars. The advisor suggested he leverage these annuities into a paid up life insurance policy. Mr. Mitchell would receive an immediate tax deduction. The deferred annuities that he owns have substantial income and federal estate tax consequences. The investments that are providing the bulk of his retirement income are doing well and he determined that he does not need the potential future income that the annuities could provide. By gifting the new life insurance policy to TBRI, his present and future tax liabilities will be reduced and at the same time, he will be making a significant endowment gift to help support the future scientific research.

The following stories are just a few of the ways that Life Insurance can be used to assist in your financial and estate planning. It is important to have a discussion with your financial and tax advisors before making any changes to your existing policies, buying new policies, or making a gift of this kind.

If you have any questions or would like more information, please call Tom Taggart, Director of Development at TBRI at 727-576-6675 x131.

Gifts of Securities

A stock portfolio is often among the most valuable assets you own, and one that carries substantial capital gain—appreciation in value.

The downside to assets that have increased in value over the years is that the federal government is prepared to levy taxes of up to 15 percent on your capital gain from securities. With careful planning, you can reduce or even avoid federal capital gains tax. We can show you how charitable giving may be one of your best defenses against capital gains taxes.

As stock prices increase, so do the taxes you owe on the capital gain, which are generally charged at a rate of 15 percent (5 percent if you are in the 10 percent tax bracket). But when you donate publicly traded stocks held long term (owned for more than one year) to a qualified charitable organization such as TBRI, you avoid all capital gains taxes. Plus, you may take the full fair market value of the stock gift as a charitable deduction on your income taxes. The maximum deduction you may take within a given tax year is 30 percent of your adjusted gross income. If you are unable to take the entire deduction in one year, you may carry the excess deduction forward for five additional years.

Even if you own stock you wish to keep in your portfolio, giving us the stock and using cash to buy the same stock through your broker provides the same income tax deduction with a new, higher basis in the stock.
If you have stock losses, sell the stock yourself to realize the loss and take the deduction for tax purposes. Then generate a charitable deduction by donating the cash proceeds of the sale to WEDU.

How Much of Your Estate Will Go to Taxes?
For managing your capital gains, three aspects of the federal tax rate structure are significant.

1. The spread between the top federal tax rate applied to long-term gain and the highest tax rates applied to ordinary income is significant. Long-term capital gains tax rate is 15 percent for most assets. Current tax rates for ordinary income exceeding specified amounts in each tax bracket are 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, and 35 percent. For taxpayers who fall within the higher tax brackets, long-term capital gains tax is more attractive than ordinary income tax.
2. Both estate and gift taxes are computed using the unified rate schedule, where the rates of tax are 35%
3. The tax on generation-skipping transfers of assets is a flat 46 percent. A decision needs to be made on whether to pay the capital gains tax now, instead of a higher gift or estate tax later.

Ways to Take Advantage of Your Capital Gains
You can achieve many desirable tax benefits through your estate plans, but there are several not for profit strategies that should also be considered for reducing your taxable estate.

Tax deferral
There is no taxable gain on appreciation until an asset is sold or exchanged.

Capital losses
Capital losses incurred can offset other taxable income.

Excludable lifetime gifts to others
Gifts to heirs during your lifetime qualify for the gift tax exclusion of $13,000 per recipient per year (indexed for inflation) or $26,000 if your spouse joins in the gifts. If the gift is real property and not cash, the recipients will inherit the cost basis of the original owners.

Stepped-up basis for heirs
Most appreciating assets held for distribution to heirs in the estate settlement process completely avoid the capital gains tax. If they are part of a taxable estate, however, the unified estate and gift tax will be on the higher appreciated fair market value. In larger estates, this future transfer tax may exceed a current capital gains tax and requires careful analysis.

If such assets remain in the estate, to be transferred to heirs at the stepped-up value at the date of death (or an alternate valuation date six months later), this becomes the new basis for the heirs and reduces their capital gains tax liability when the assets are sold.

Using Gains to Achieve Your Philanthropic Objectives
Income tax charitable deductions have become increasingly significant in reducing taxable income, particularly since tax reform has eliminated many other tax deductions.

When appreciated property held long term (owned more than one year) is used for a charitable gift and the property is otherwise to be sold by the donor for market or other reasons, two tax savings result. First, the donor is entitled to a charitable deduction for the full fair market value rather than the original cost, and second, the donor avoids the capital gains tax. A third, smaller savings results from avoidance of any commission cost, which is incurred by charitable trust.

Whenever income tax deductions for gifts to publicly supported charitable organizations are claimed for gifts of long-term capital gain property, the total of such deductions that can be used in a particular year is limited to 30 percent of the donor’s adjusted gross income, rather than the 50 percent annual limitation for cash gifts. For most donors, the total deduction is typically all usable, since it can be carried forward for five years.

Charitable gift options come in many shapes and sizes. We are happy to provide projections of results from any of the following plans that may be of particular interest.

Outright Gift of Capital Gain Property


Robert gives TBRI shares of publicly traded stock he has held for more than one year. Their fair market value (the average of high and low trades for the day of the gift multiplied by the number of shares) is $12,000; their original cost, $5,000. His marginal federal income tax rate is 28 percent, and he is not subject to state or local income taxes.

The $4,410 of total taxes ($1,050 capital gains + $3,360 income tax) avoided that the government “contributed” to the gift transaction which nearly equals the net cost, and Robert has made a gift of $12,000 to his favorite charitable organization.

IRA Gifts

On December 17, 2010, President Barack Obama signed into law, H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This new tax bill provides a two-year retroactive extension of the IRA Charitable Rollover.

To take advantage of this opportunity for the 2010 tax year, you should act quickly. Any eligible gifts made by January 31, 2011 are allowed to be treated as a 2010 donation and can be used to satisfy the donor’s minimum distribution requirement for 2010.

The new expiration date for the IRA Charitable Rollover provision is December 31, 2011, which means that qualifying gifts made to eligible charities throughout 2011 will qualify for favorable tax treatment under the bill.

Qualifications include:

• You must be an owner of traditional IRA age 70 1/2 or older. 

• The transfer must come directly from the plan administrator to a qualified charity like TBRI. 

• No more than $100,000 per year (with this new bill, a donor may transfer up to $100,000 by January 31, 2011 for the tax year 2010 and $100,000 by December 31 for tax year 2011). 

Be sure you give your IRA custodian adequate lead time to complete the transfer.

As always, you should consult your attorney and tax advisors when considering such matters. This information is not intended as specific legal or tax advice.

Gifts of Retirement Plans:

A retirement plan is one of the best types of assets to transfer to a charity because it produces taxable income. Most assets an heir inherits are free from income tax.

However, an heir will pay income tax on disbursements from a decedent’s retirement plan such as a profit sharing plan, Section 401(k) plan or IRA. If you are going to make a charitable bequest, it is usually better to transfer the taxable assets subject to income tax to a tax-exempt charity, such as TBRI, and to transfer the assets not subject to income tax to your heirs.

Like many Americans, you are probably aware that the accumulation of assets in your retirement plan is the basis for a financially secure future. To preserve your retirement assets after your lifetime, consider the benefits of using them in a totally different way.

Retirement accounts are often exposed to income taxes and estate taxes, at a combined marginal rate that could rise to 65 percent or even higher on large, taxable estates. Yet many of these taxes can be avoided or reduced through a carefully planned charitable gift.

Other considerations come into play when deciding on using retirement plan assets for charitable giving. Your account can pass directly to a charitable organization as your primary beneficiary, or it can be transferred to a deferred giving arrangement that will pay an income for life to a family member, after which the remaining assets pass to the organization. You might even consider a deferred gift that is designed to pay a life income to yourself.

How to Donate Your Retirement Account
The simplest way to leave the balance of a retirement account to us after your lifetime is to list us as the beneficiary on the beneficiary form provided by your plan administrator. Never make a beneficiary change, however, before discussing your desires with your professional advisor. For an IRA or Keogh plan you administer personally, notify the custodian in writing and keep a copy with your valuable papers.

If you are married, your surviving spouse is entitled by law to receive the entire amount in these qualified plans: money purchase pension, profit-sharing plan, 401(k) plan, stock bonus plan, ESOP or any defined benefit or annuity plan (though not an IRA). In order for the assets to be transferable to WEDU, your spouse must execute a written waiver (even though you may designate a charitable organization as beneficiary on your employer’s forms). Your spouse can execute one after your death, if necessary. In that case, the document must also include a qualified disclaimer.

If you prefer to make your spouse the primary beneficiary of the retirement account, you can name WEDU as the secondary beneficiary.

Perhaps you want your children to benefit from your retirement account, too. In that case, you might designate a specific amount to be paid to us, before the division of the rest among your children.

Gifts of Real Estate

If you’ve owned your home or other real estate for a long time, no doubt it has increased in value significantly. What happens if you sell the property?

First of all, the sale is subject to capital gains tax on the property’s appreciation. If the property has been your main home for at least two of the past five years, you can exclude up to $250,000 of gain ($500,000 for married couples). However, this opportunity to avoid capital gains tax doesn’t apply if the property is a vacation home, land or any real estate other than your primary residence. Plus, there’s the cost of marketing and selling real estate, which also takes time and effort, even if you use professional assistance.

Before you sell real estate, consider a new option. If you’d like to help fulfill our mission, your property opens the door to a unique giving opportunity: donate the property to us. You can give the property outright, place it in trust, retain the use of it for life or give it by will. All of these methods will enable you to enjoy personal financial benefits while supporting our work in a meaningful way.

Let’s look at the various federal rules used to figure your tax savings, and apply them to certain kinds of gifts to show how you can benefit.

Tax Benefits of an Outright Gift
When you make an outright gift of real property held for more than a year, you obtain an income tax charitable deduction equal to the property’s full fair market value. This deduction lets you reduce the cost of making the gift and frees cash that otherwise would have been used to pay taxes.

By donating the property to us, you also avoid capital gains tax on the property’s appreciation. Furthermore, the transfer isn’t subject to the gift tax, and the gift reduces your taxable estate.

Example: Elizabeth gives us a vacation cottage she no longer uses. It originally cost $50,000 but is now worth $150,000. She gets a $150,000 charitable deduction, which represents a tax savings of $42,000 in her 28 percent tax bracket. And she completely avoids tax on the $100,000 of appreciation. Now she no longer has to maintain the cottage, and the property won’t be taxable in her estate.

Your deduction for a gift of appreciated real estate in any year is generally limited to 30 percent of your adjusted gross income, with a five-year carryover of the unused deduction. If you elect to base your charitable deduction on the cost of the property, this raises your AGI limitation to 50 percent with a five-year carryover, but this has implications for all gifts made during or carried over to that year.

For real estate you’ve held only short-term, your charitable deduction is limited to the property’s cost basis, but there’s still no tax on the appreciation. The deduction may be claimed up to 50 percent of your adjusted gross income, again with a five-year carryover for any excess value.

Your gift is usually effective when a properly executed and notarized deed, suitable for recording, is delivered. The amount of your deduction for a gift of real estate (if more than $5,000) must be substantiated by a qualified appraisal of its fair market value.

Give Your Home But Enjoy Life Use
Let’s assume you like the tax advantages a charitable gift of real estate would offer, but you want to continue living in your personal residence for your lifetime. You’d like to retain the right to rent your house or make improvements. You may also want a survivor (perhaps your spouse) to enjoy life occupancy. But, ultimately, you’d like for a charitable organization, such as WEDU, to receive the property.

By deeding your home to us now, subject to all these rights, you can still obtain valuable tax savings. This arrangement is called a retained life estate. Even though the non-profit would not actually take possession of the residence until after the lifetimes of the tenants you’ve named, you receive an immediate income tax charitable deduction because the gift cannot be revoked. The amount of the deduction depends on the value of the property and your age (and the age of any other person given life use).

Setting up a retained life estate through us is possible if you want someone other than a spouse to have use of the property after your lifetime. Leaving a home to a spouse through a will or some form of joint ownership generally does not result in a federal estate tax under current laws. However, if you want one of your children or a relative or friend to live in the home after your lifetime, you may find that estate taxes will have to be paid to leave the property to that person.

With this kind of gift, you retain the rights and responsibilities of ownership—other than disposing of the property after your death. That is, you may continue to live as you have with no interference from Asbury Foundation. You may even decide to move out temporarily or permanently. Should you rent the home, all of the rent belongs to you.

You can make a retained life estate arrangement with any personal residence, including a farm, vacation home, condominium or stock in a cooperative housing corporation (if it’s used by you). A farm may include acreage with or without a house.

Tax Savings for Partial Use
Say you have a home you don’t occupy year-round. You can make a deductible gift to us of an undivided interest, allowing us exclusive use of the property for part of each year.

A vacation home can be ideal for this purpose. For example, you could give us a half interest. You would continue to use the property for six months of each year while we, as half owner, would use it for the remaining six months. You receive an income tax deduction for the fractional interest contributed to us, based upon its market value. That interest will also escape estate taxes. You can also give TBRI a remainder interest in the part of the property you retain. Then you receive an additional income tax deduction, based on your age and other factors.

Giving Real Estate Through Your Will
If making an irrevocable gift of the property through one of the options we’ve discussed is not to your liking, consider giving it to us in your will. Because your will is revocable (that is, you can change your mind at any time during your life), you will not be able to take an income tax deduction, but the property will not be taxed in your estate.

If you wish, you can give another person life use before unrestricted ownership passes to us. Or you can bequeath full title to an individual if that person survives you, with our organization as the contingent recipient. When an individual is given life use, it is best to make it clear that he or she is responsible for maintenance, insurance, repairs and improvements.

If you don’t need to make a new will now for any other reason, ask your attorney to draw a brief codicil for this purpose.

Suitable Property to Donate
Real property, such as vacant land, has a cost of ownership (property taxes and insurance, for example) with no offsetting return. And a vacation home that is no longer used enough to justify the investment, costs and responsibilities may be suitable as a gift.

Not all property increases in value. An older commercial building in a declining neighborhood may be worth as much to a donor currently, in terms of the charitable income tax deduction from an outright gift, as it is likely to be worth in the future. Or it may be used to fund a charitable remainder trust paying an income for life. Developed investment or commercial property may provide significant capital gains tax savings when used to make a gift and avoid potential depreciation recapture as well.