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If a donor is contributing property that would have yielded a long-term capital gain in a sale, then the deduction for the contribution is limited to 30% of donor's adjusted gross income in the year of donation if the donee is a public charity, and limited to 20% if the donee is a private foundation. Contributions over the respective AGI ...
So, for example, a couple may have itemized deductions of $20,000 and decide that they want to establish a fund with a $50,000 contribution and reap the additional tax deduction.
If the organization purpose is one of those described in §501(c)(3) of the Internal Revenue Code, [3] it may apply for a ruling that donations to it are tax deductible to the persons or business entities who make them. The organization itself will be exempt from taxation as long as it does not engage in unrelated business activities.
26 U.S.C. § 170 provides a deduction for federal income tax purposes, for some donors who make charitable contributions to most types of 501(c)(3) organizations, among others. Regulations specify which such deductions must be verifiable to be allowed (e.g., receipts for donations of $250 or more).
This charitable giving can help cut back on your taxes.
A donor-advised fund has some disadvantages compared to a private foundation, and some advantages. Both can accept donations of unusual or illiquid assets (e.g., part ownership of a private company, art, real estate, partnerships or limited partnership shares), but a donor-advised fund has higher deductions for these gifts (depending on the gift).
The standard deduction is rising 6.9% or 7.2%, depending on filing status, while the Earned Income Tax Credit amount will increase by 7.1%, the Internal Revenue Service announced this week.
There is no gift tax if it is intangible property, such as shares in U.S. corporations and interests in partnerships or LLCs. Non-resident alien donors are allowed the same annual gift tax exclusion as other taxpayers ($14,000 per year for 2013 through 2016 [ 9 ] ).