Tangible Personal Property
Goal: Make a gift of real property, such as coins, stamps, antiques or art
Benefit: A charitable tax deduction and the possibility of income for life if done through a trust
Tangible Personal Property, such as art, jewelry, coin collections and household furnishings can be gifted recognizing that there are specific guidelines from the IRS as to the tax deductibility of the gift. Two key issues to be considered before contributing a gift of this type is whether or not the item(s) can be put to related use or whether its use or function is related to the tax-exempt purpose of the charity to which it is donated.
The IRS has very specific guidelines for appraising and reporting gifts of tangible personal property, which must be followed to support a charitable income tax deduction. There are also requirements regarding the size and value of the gift and time frames within which reports must be filed. Gifts such as these may require approval by our Board of Directors.
Donors can give tangible personal property in a variety of ways depending on their personal objectives. The easiest and most common method is an outright gift allowing the charity to have immediate use of the property. But, other methods may enable the donor to convert the personal property into a stream of payments. Depending on the property and its value, it may be possible to fund a Charitable Remainder Trust or a gift annuity (if available through the charity). Another option is using a bargain sale agreement that provides payment to the donor in installments.
Even though a gift of property for non-related use may not create a significant charitable tax deduction, other significant aspects may be very advantageous for the donor. The avoidance or postponement of tax on the capital gain for collectibles is significant as the tax is higher than on a gift of appreciated securities. Other financial benefits could include payments for life or a term of years and/or the exclusion of the property from a taxable estate.
For more information or a confidential discussion of your charitable options, please email or call Danielle Ruddy at 717-232-7509.