|
Effective gift planning is an important element of sound financial management. Planning a gift requires a thoughtful approach and careful consideration of your financial resources and how a gift will affect your income, current taxes, and estate taxes. Through effective gift planning you can achieve both your charitable objectives and your financial goals. Your gift decisions will profoundly affect the future of Bismarck State College. Whatever the size or form of your gift, we will work with you and your professional financial advisors to prepare a plan of giving that complements your interests in Bismarck State College and helps you meet your financial and estate plan objectives.
Most donors to Bismarck State College Foundation choose to make gifts of cash. A cash gift is deductible for the year in which you make your contribution if you itemize your tax return. Any excess can generally be carried forward and deducted over as many as five subsequent years.
Some employers will match your charitable gifts, meaning your gifts are worth even more. Please check with your human resource officer and if your company has a matching gifts program, simply enclose the necessary forms along with your gift.
If you own stock, it is often more tax wise to contribute stock than cash. This is because a gift of appreciated stock generally offers a two-fold tax saving. First, you avoid paying any capital gains tax on the increase in value of the stock. Second, you receive an income tax deduction for the full fair market value of the stock at the time of the gift. Gifts of appreciated stock are fully deductible -- up to a maximum of 30% of your adjusted gross income (AGI). Any excess can generally be carried forward and deducted over as many as five years.
Example: If you purchased some stock many years ago for only $1000, and now it is worth $10,000, an outright gift of stock to us would result in a charitable contribution deduction of the full $10,000. In addition, there is no tax on the $9,000 appreciation in value.
Today, many investors own shares of mutual funds instead of individual shares of stock. Mutual funds have enjoyed phenomenal growth over the past few years. In many cases it is wise to contribute shares of the mutual fund instead of cash. Like gifts of stock, you gain the advantage of the growth in value while avoiding the capital gains tax. You receive an income tax deduction for the full fair market value of the mutual fund shares at the time of the gift. Gifts of mutual funds are fully deductible -- up to a maximum of 30% of your adjusted gross income (AGI). Any excess can generally be carried forward and deducted over as many as five years. Unlike gifts of stock, there is not a uniform method to transferring shares of mutual funds. Each fund has different procedures for handling charitable gifts. Please contact our office before transferring shares of a mutual fund.
A gift of real estate can also be tax wise. A residence, vacation home, farm, or other real estate may have so appreciated in value through the years that its sale would mean a sizable capital gains tax. By gifting this property instead, you would avoid the capital gains tax, and at the same time, receive a charitable deduction for the full market value of the property.
It is also possible to make a gift of your home, farm, or vacation home so that you and your spouse can continue to use it for your lives while receiving a current income tax deduction.
Example: Mr. and Mrs. Brown own a vacation home they would like to continue using. The fair market value of the property is $100,000. By contributing the home to us now, but retaining the exclusive right to use it for the rest of their lifetimes, the Browns are able to achieve a current income tax deduction of approximately $25,000. (The precise amount will depend on their ages, the useful life of the house, and other factors.)
A gift of life insurance can provide a significant charitable deduction. You could purchase a new policy or donate a policy that you currently own but no longer need. To receive a deduction, designate us as both the owner and beneficiary of the life insurance policy. Check with your insurance agent for the details.
Example: Mr. Jones owns a $100,000 life insurance policy with a current cash value of $34,582. By transferring the policy to us as the new owner and beneficiary, Mr. Jones is able to receive a current charitable deduction in the amount of $34,582. If Mr. Jones decides to continue paying the premiums on the policy after the gift is made, these additional premium payments will be tax deductible each year.
To contact us:
|
