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November 1, 2011 Bryan Clontz, CFP® President Charitable Solutions, LLC
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Program Benefits This program offers a number of benefits for financials advisors and donors:
Asset Retention: Advisors can retain and manage client charitable assets at their financial institution on an ongoing basis on behalf of the Community Founda-tion.Non-managed Assets: Non-managed cli-ent assets, such as real estate, closely-held business interests, personal property and art can be converted into charitable funds that are managed through the program.Philanthropic Services: Financial advisors can offer philanthropic consulting ser-vices to their clients by connecting them to the Community Foundation – adding value to their investment services and client relationships. With more than 80 years of experience, we are able to bring significant community knowledge to bear in crafting creative approaches to clients’ charitable goals and objectives.
Program Policies and CriteriaThe Community Foundation’s Board of Di-rectors has approved a policy statement for the Financial Advisors Program. Program highlights include:
Fund Minimum: This program is open to funds with minimum balances of $500,000. Funds with balances less than $500,000 may be invested in one of sev-eral other investment options we main-tain listed on page 2.
a.
b.
c.
a.
Investment Allocations Strategies: We have adopted four model investment alloca-tion strategies reflecting a variety of risk tolerances, time durations and philan-thropic purposes. These include: Short Duration Fixed Income, Core Fixed In-come, Balanced and Growth strategies.Reporting and Benchmarking: Our Fi-nance Committee and investment con-sultant will periodically review invest-ment performance of funds managed through the program against applicable benchmarks.
Identifying Clients Who Qualify Some typical examples of clients appropriate for this program include those who:
Are planning to sell a private company or have high capital gains tax exposureAre contemplating life transitions—whether they are retired, have no chil-dren or are involved in estate planning decisionsWant a charitable tax deduction now with the flexibility to make grants over time Want to grow charitable contributions tax-free over timeDesire to create endowments benefitting multiple nonprofit organizationsDesire to give something back to Cen-tral New York communitiesAre involved in multiple charities, civic causes or issuesWant to engage their children or family members in philanthropy
b.
c.
a.
b.
c.
d.
e.
f.
g.
h.
The Financial Advisors Program allows donors to recommend a financial advisor or firm to invest charitable funds created at the Central New York Community Foundation. The investments for these charitable funds are managed by financial advisors or firms outside of our primary investment pools.
: Financial Advisors Program
CENTRAL NEW YORK COMMUNITY FOUNDATION
www.cnycf.org(315) 422-9538
Types of FundsA variety of client charitable goals and objec-tives can be achieved through the Commu-nity Foundation’s charitable fund options.
Community Fund: Grants from our un-restricted Community Fund support the broadest range of charitable needs and issues in our region, now and in the fu-ture.Designated Funds: Donors designate specified charities to receive support on an ongoing basis. This option is popular in cases involving small charities, multi-ple charities or where there is a desire to endow and monitor charitable programs funded by the donor.Donor Advised Funds: A popular alter-native to a Private Foundation, Donor Advised Funds allow a donor, family, business or group to recommend grants from a charitable fund administered by the Community Foundation.Field of Interest Funds: For donors look-ing to support a particular field of inter-est (e.g., arts, environment), geographic area (e.g., Madison County, Auburn) or population (e.g., single mothers, in-dividuals with disabilities), a Field of Interest fund is structured to support ef-fective charitable programs in particular fields that change over time.Scholarship Funds: Funds can be created to focus on a particular a high school, college, scholastic discipline or profes-sional field. We are the largest non-aca-demic manager of scholarships in Cen-tral New York.
Bequests and Planned GiftsClients can name a fund to benefit from a percentage of their estates, as the remainder beneficiary after other gifts are made or uti-lize other gift options.
Charitable Trusts: Clients can establish a Charitable Remainder Trust or Chari-
a.
b.
c.
d.
e.
a.
table Lead Trust and name the Com-munity Foundation as the beneficiary for the purpose of creating any type of charitable fund and purpose.Private Foundation Termination: A client might consider terminating an existing Private Foundation in order to simplify their giving or address succession plan-ning issues.Retirement Plans: Naming the Commu-nity Foundation through a retirement plan beneficiary designation can be a very tax-efficient way to make a chari-table gift.
Other Investment Options We maintain several investment pools and options.
CNYCF Permanent Investment Pool: The permanent investment pool is our pri-mary investment vehicle, representing about $100 million in commingled in-vested assets for most of our 500 com-ponent charitable funds. This pool’s current allocation is: 55% equities, 22% fixed income and 23% alternatives.CNYCF Short Term Liquidity Pool: This investment pool is appropriate for funds with short-term horizons for grantmak-ing purposes or donors desiring no mar-ket exposure for their funds.American Funds Mutual Funds: For funds with balances of less than $500,000, do-nors may request an allocation to a port-folio of American Funds mutual funds. A donor’s financial advisor is listed as the referral source of record with Ameri-can Funds.Socially Responsible Investments: For do-nors desiring particular social screens or investment approaches outside these options above, we can craft personalized investment structures reflecting their goals.
b.
c.
a.
b.
c.
d.
: Financial Advisors Program (cont.)
www.cnycf.org(315) 422-9538
Advanced Charitable Brainteasers: Common Problems and Uncommon Solutions
November 1, 2011
Bryan Clontz, CFP®
President
Charitable Solutions, LLC
(404) 375‐5496
All Materials Copyright 2011, Charitable Solutions, LLC
Brought to you by:
Agenda
EIGHT ADVANCED CHARITABLE CASE STUDIES1. Life‐Changing Baseball Coach: Commodities for
College2. Artwork to Ireland: Thankfully People Buy Modern Art 3. Corporate Real Estate Give‐Back: Employees Retrained 4 D t ’ With G d I t t B li It N t!4. Doctors’ With a Good Investment: Believe It or Not!5. Religious Conversion: Stabilizing a Family Foundation6. Asset Compression and Anonymity: Lesson Learned7. Pledge Fulfilled With Leveraged Dollars: Saving Face 8. S‐Corporations and Roach Motels: Tax Arbitrage is a
Beautiful Thing
Charitable Brainteaser #1 – Situation
LIFE‐CHANGING BASEBALL COACH: COMMODITIES FOR COLLEGE•Client’s son barely graduated high school
•Went to small Midwestern university on baseball scholarship
•Immediately, coach positively changed son’s life
•Son is 27, graduated from Princeton and VP in father’s Commodity Trading Business
•Father wants to create a Scholarship Fund to honor coach
•Doesn’t want Fund if coach leaves or retires
•Father’s assets are limited except for three seats on the NYMEX
Source: Spectrem Group and Reality Times, June 2004
Charitable Brainteaser #1 – Solution
NYMEX Seat
Family Donor Advised Fund:
Son Named
Successor Advisor
Father Wants to
Thank Baseball
Coach
Made Grants to Coach’s
Current School for
Baseball Scholarships
Charitable Brainteaser #2 – Situation
ARTWORK TO IRELAND: THANKFULLY PEOPLE BUY MODERN ART
• New York client owns multiple pieces of inherited art currently in storage
• Originally intended to bequeath art to local church• Originally intended to bequeath art to local church
• Now he wants to make a $500,000 donation to an Irish charity’s endowment with no US‐affiliate
• Ideally, he would like to keep the money with his investment advisor for the next 10 years
Charitable Brainteaser #2 – Solution
Donor Advised Fund Sells Art
at Sotheby’s for $500,000
Money Manager Named
Investment Agent
Two Paintings
Donor Seeks to
Support
Irish Charity
5% Distributed Annually
to US-Based Donor Advised Fund
Specializing in International Grants
Charitable Brainteaser #3 – Situation
CORPORATE REAL ESTATE GIVE‐BACK: EMPLOYEES RETRAINED
• Fortune 500 corporation shut down domestic textile mill production and outsourced jobs
• Goal was to create a foundation to provide job‐retrainingGoal was to create a foundation to provide job retraining and social service grants to effected employees
• Critically important to maximize tax savings and minimize administrative burden
• Would consider funding with cash or shuttered mill property
Charitable Brainteaser #3 – Solution
Corporation Donor Advised Fund
VP/Community Affairs Named
Fund Advisor
Mill Real Estate
Public Corporations
Wants to Support
Displaced Employees
Grants to Multiple Southeastern Rural
Communities for Job Retraining and
Social Services
Charitable Brainteaser #4 – Situation
DOCTORS WITH A GOOD INVESTMENT: BELIEVE IT OR NOT!
• Four doctors owned their medical building with virtually zero cost‐basis
• A regional REIT offered to purchase it every year
D t t d t ti d ll ti t i j i• Doctors wanted to retire and sell practice to six junior doctors
• Junior doctors wanted long‐term lease
• Each doctor was charitably‐inclined but wanted to maximize tax savings and receive a life income
• Two were particularly concerned about disinheriting children/grandchildren with donations
Charitable Brainteaser #4 – Solution
$1 2 illi /20% I
Four Donor Advised Funds
Children Successor Advisors
$1.2 million/20% Interest Four 7 Percent
Charitable Remainder Trusts
for LifeFour Doctors
Owned $6.0 Million Medical Building
$1.2 million/20% Interest
Multiple Grants
to Multiple Charities
$1 Million
Insurance
Trust #1
$300K
Insurance
Trust #2
Charitable Brainteaser #5 – Situation
RELIGIOUS CONVERSION:STABILIZING A FAMILY FOUNDATION
• 5 years ago, grandfather wanted a 100% charitable estate tax deduction without irrevocably giving the assets to charity
h ld d f d h ld• Now, two children and four grandchildren are on foundation’s board – one grandchild married outside of faith and upset her brother
• She feels ostracized and can’t make grants to new church
• Family foundation had not met 5% payout requirement and also wanted to grant to an environmental charity but application expressly excluded environmental groups
Charitable Brainteaser #5 – Solution
Donor Advised Fund
for Daughter
26-Year Charitable
Lead Annuity Trust/
Family Foundation
2 Parents/4 Children
Daughter Made Grants on Her Terms
and Family Foundation Flowed Anonymous Grants Through Fund
Charitable Brainteaser #6 – Situation
ASSET COMPRESSION AND ANONYMITY: LESSON LEARNED
• An overly optimistic client was named capital campaign chair for church – promised completion in 24 months
• As a warehouse developer, he held a number of triple‐net lease properties which he wanted to tax‐effectively transfer to his children
• 23.9 months into the campaign, he called to say the campaign was $300,000 short and he needed some solutions
• Also, his 80‐year‐old mother planned to contribute $500,000 to the church campaign for a charitable gift annuity (income for life) but was concerned about default risk
Charitable Brainteaser #6 – Solution
Donor Advised Fund for
Anonymous Campaign Gift
13-Year Zero-Out
Charitable Lead
Annuity Trust
Funded With Family
Limited Partnership/
Mother’s 8% Charitable Gift Annuity
Church Foundation
Single Premium
Immediate Annuity
Triple-Net-Lease
Property
Charitable Brainteaser #7 – Situation
PLEDGE FULFILLED WITH LEVERAGED DOLLARS: SAVING FACE
• 65 entrepreneur pledged $10 million to name a business school in 1999
• Company collapsed in 2006 and he had $7 million remaining on the pledge
• School said either $7 million now or $15 million in an irrevocable estate gift
• Client had an $4 million IRA, $13 million stock portfolio and a $5 million life insurance policy ($2 million in cash) originally purchased in 1985 as a cross‐purchase business buy‐sell (underperforming) and about $300K in cash
• Client does not want pledge fulfillment to negatively impact three children
Charitable Brainteaser #7 – Solution
Donor 1035-Exchanges Old
Policy For Better Performing
$15 Million Death Benefit/
$4 Million Cash Value
Donor Needs to
Complete School
Pledge
Donates Policy to University
Funds with IRA Contribution and
$2 million Appreciated Stock
$4 Million Cash Value
$2 Million
Life Insurance Trust
For Three Children
$100K from
IRA – Tax-Free
Charitable Brainteaser #8 – Situation
S‐CORPORATIONS AND ROACH MOTELS: TAX ARBITRAGE IS A BEAUTIFUL THING
• Investment advisor’s firm is a S‐Corp and he wants to sell $500,000 to new partner
• State income tax rate is 8%State income tax rate is 8%
• Investment advisor is charitably‐inclined
• Advisor wants to use the S‐Corp stock if possible to make a contribution to consumer credit counseling
• S‐Corp has zero cost‐basis and all gain is categorized as unrelated business taxable income to the charity (UBTI)
Charitable Brainteaser #8 – Solution
Public Charitable Trust
With a Donor Advised Fund
Sells to New Partner/15% Gains
Tax Reduced by 50% for Deduction
Advisor Contributes
S-Corp to Trust-Form
Public Charity in
Florida (Income for Deduction
Charity Receives Net 94% of Gift as Grant
Donor Receives a 100% FMV Deduction
Vs. Sale and Gift Netting 77% to Donor and Charity
Tax-Free State)
35 90%
41.20%
16.60%
16.40%
26.60%
16.10%
26.00%
27.80%
42.90%
44.30%
19.80%
24.10%
38.80%
40.80%
67.50%
Peers or Peer Networks
Fundraisers / Nonprofit staff
Financial and Wealth Advisors
Attorney
Accountant
HIGH NET WORTH HOUSEHOLDS CHARITABLE GIVING DECISIONS BY TYPE OF PERSON CONSULTED (%)
2010
3.70%
7.10%
12.30%
8.70%
15.20%
35.90%
4.00%
9.90%
3.30%
16.50%
15.10%18.10%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Coaching Program
Broker
Others
Bank or Trust Co. Staff
Community Foundation Staff2008
2006
The following slides were developed by Lee Hoffman, President/CEO, Planned Giving Design Center from data derived from "The 2010 Study of High Net Worth Philanthropy" Sponsored by Bank of America and researched and written by The Center on Philanthropy at Indiana University
20.90%
46.50%
3.10%
11.70%
D Ad i d F d t C Fd
Endowment Fund
Will with Charitable Provision
HIGH NET WORTH HOUSEHOLDS WHO HAVE OR WOULD CONSIDER ESTABLISHING IN THREE YEARS
12.00%
15.40%
17.50%
3.40%
8.00%
2.80%
0% 10% 20% 30% 40% 50% 60% 70%
Private Foundation
Charitable Remainder/ Lead Trust/ Gift Annuity
Donor‐Advised Fund at Comm. Fdn., Bank or Other Org.
Currently Have Would Consider Establishing in 3 Years
10%
WHO INITIATED THE CONVERSATION ABOUT PHILANTHROPY?
90%
Donor Advisor
Thank you for Coming!
Bryan Clontz, CFP®
President
Charitable Solutions, LLC
(404) 375‐5496
Peter A. Dunn
President & CEO
Central New York Community Foundation
(315) 422‐9538
Advanced Charitable Brainteasers: Common Problems, Uncommon Solutions
Case Study Legal/Tax References Guide
Legal/Tax Issues in Case Study #1 – Commodities for College
Donor Advised Fund Grants to Scholarship Fund - Under the Pension Protection Act provisions, sponsoring organizations may make grants to natural persons from amounts not held in donor advised funds and may establish scholarship funds that are not donor advised funds. A donor may choose to make a contribution directly to such a scholarship fund (or advise that a donor advised fund make a distribution to such a scholarship fund). Capital Gain vs. Ordinary Income Asset – IRC 170(b)(1)(A) as well as (a) and (e) related to deductibility limitations.
Legal/Tax Issues in Case Study #2 – Thankfully People Buy Modern Art
Tangible Personal Property Donated to a Non-Use Related Charity – Deduction is limited to adjusted cost basis – IRC 170(e)(1)(B)(i).
Collectibles Tax – IRC 170(e)(1)(B)(ii) states that the federal capital gains tax rate is 28%.
Potential Excess Benefit Transaction with Investment Advisor – A new Pension Protection Act provision is that the entire amount of the payment be treated as the amount of the excess benefit differs from the generally applicable rule of section 4958, which provides that the excess benefit is the amount by which the value of the economic benefit provided exceeds the value of the consideration received. Expenditure Responsibility for International Grant - In general, expenditure responsibility requires that a foundation make all reasonable efforts and establish reasonable procedures to ensure that the grant is spent solely for the purpose for which it was made, to obtain reports from the grantee on the expenditure of the grant, and to make reports to the Secretary regarding such expenditures, see Sec. 4945(h). Legal/Tax Issues in Case Study #3 – Corporate Foundation Look-Alike
Public Charity vs. Private Foundation Tax Rules – IRC 170(b)(1)(A) outlines the rules relative to public charity deductibility, and IRC 170(b)(1)(B) outlines the rules relative to private foundation deductibility. The rules relating to the contribution of long term capital gain property limitations to a public charity are covered here IRC 170(b)(1)(C)(i) and Reg 1.170A-8(d)(1).
C-Corporation Deduction Rules - IRC 170(b)(2), IRC 170(d)(2) and Reg. 1.170A-11(c) cover the 10% of net income deduction limitation and the five year carry forward provisions for any unused deduction.
Legal/Tax Issues in Case Study #4 – Doctors with a Real Estate Investment
Partial Interest Gifts - IRC 170(f)(3) disallows any partial interest gifts. The exceptions can be an entire undivided interest (IRC 170(f)(B)(iii) or qualified split-interest contributions like charitable remainder trusts – see IRC 664(d)(2).
Qualified Appraisal Requirements and Substantiation – Pension Protection Act Definitions
Qualified Appraisers The provision defines a qualified appraiser as an individual who (1) has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements to be determined by the IRS in regulations; (2) regularly performs appraisals for which he or she receives compensation; (3) can demonstrate verifiable education and experience in valuing the type of property for which the appraisal is being performed; (4) has not been prohibited from practicing before the IRS by the Secretary at any time during the three years preceding the conduct of the appraisal; and (5) is not excluded from being a qualified appraiser under applicable Treasury regulations. Qualified Appraisals The provision defines a qualified appraisal as an appraisal of property prepared by a qualified appraiser (as defined by the provision) in accordance with generally accepted appraisal standards and any regulations or other guidance prescribed by the Secretary.
See Reg. 1.170A-13(c)(1)(i) and Reg. 1.170A-13(c)(3)(i).
Charitable Remainder Trust Provisions – Charitable remainder trusts are discussed at length in Chapter 13. Flip unitrust provisions can be seen in Reg. 1.664-3(a)(1(i)(c)-1.6643(a)(1)(i)(f).
Irrevocable Life Insurance Trust – This trust, if designed properly, allows for the death benefit to be both income and estate tax free - IRC 2042(1) and(2).
Legal/Tax Issues in Case Study #5 – Stabilizing a Family Foundation
Charitable Lead Annuity Trust – For a comprehensive overview of charitable lead trusts, see IRC 170(f)(2)(B), 2055(e)(2)(B) and 2522(c)(2)(B).
Private Foundation Qualifying Grant – The 5 percent minimum distribution rule is covered here IRC 4942(e). Grants to public charities, like community foundations component funds, qualify as distributed income.
Anonymous Grants – Private foundations must disclose all grants on the 990-PF tax return. Community foundations also have to disclose the amount and organization of all grants, however, they are aggregated from all the sponsoring organizations component funds. The public charity 990 tax return does not require each grant to be “attached” to specific funds.
Legal/Tax Issues in Case Study #6 – Asset Compression and Anonymity
Charitable Lead Annuity Trust Valuation – The IRS approved a CLT funding with limited partnership interests, as the partnership’s income comprised solely of passive investment income. Thus it was not a business enterprise and the income was not unrelated business taxable income (UBTI) – see PLR 9810019.
Charitable Gift Annuity – Complete coverage of gift annuities can be found at Reg. 1.170A-1(d)(1), Rev. Rul. 55-388, 1955-1 CB 233; Rev. Rul. 80-281, 1980-2 CB 282 – in particular the tax deductibility of the qualified installment bargain sale transaction.
Charitable Gift Annuity Reinsurance Provisions – Qualifying reinsurance provisions can be found in 170(f)10 charitable reverse split dollar rules. There have also been two relatively recent PLRs 200847014 and 200852037 that allow for some flexibility in the reinsurance design. A number of additional articles can be found at http://charitablesolutionsllc.com/library.html and the American Council on Gift Annuities – www.acga-net.org.
Legal/Tax Issues in Case Study #7
IRA Rollover – A qualified charitable IRA rollover, outlined in IRC 408(d)(8)(A), allows an individual 70 ½ and older, to make a direct contribution of up to $100,000 of their retirement account to a public charity (excluding donor advised funds and supporting organizations). It was extended through December 31, 2011. The direct distribution is not included in income.
Charitable Gifts of Life Insurance – Since nearly all life insurance gain is ordinary income, the deduction is limited to the lesser of fair market value or adjusted cost basis – see IRC 170(e)(1)(A).
Legal/Tax Issues in Case Study #8
Charitable Gifts of S-Corp Stock – Chris Hoyt wrote an excellent article on S-Corp at http://lawprofessors.typepad.com/trusts_estates_prof/2011/09/donations-by-s-corporations-and-shareholders-.html . It is also covered in IRC 512(e).
Trust Tax Law for Charitable Contributions – IRC 512(B)(2) allows for a trust to take a charitable income tax deduction up to 50% of its Unrelated Business Taxable Income (UBTI). Further, a trust is taxed at individual rates for recognized long-term capital gains at the 15 percent federal rate.
Fina
ncia
l/Es
tate
/Tax
Pla
nnin
g C
onsi
dera
tion
s fo
r T
op T
en N
on-C
ash
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ontr
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Asse
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us F
orm
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and
Pot
entia
l Tra
psPl
anne
d G
ift Is
sues
Ad
ditio
nal C
omm
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Rea
l Est
ate
Ded
uctio
n: F
MV
Res
iden
tial,
com
mer
cial
, do
mes
tic o
r for
eign
, le
aseh
old/
life
or re
mai
nder
in
tere
st
Envi
ronm
enta
l lia
bilit
y, h
oldi
ng p
erio
d m
anag
emen
t, ac
cele
rate
d de
prec
iatio
n,
nega
tive
basis
, deb
t (no
te “
5-an
d-5
UBT
I exc
eptio
n”),
pre-
arra
nged
sale
Idea
l for
FLI
P-C
RU
T, d
iffic
ult f
or
CR
AT a
nd C
GAs
bec
ause
of
mar
keta
bilit
y
Rea
l esta
te re
pres
ents
near
ly 5
0% o
f priv
atel
y he
ld w
ealth
, esti
mat
ed a
t tw
ice
the
entir
e sto
ck
mar
ket.
Yet
onl
y 2%
of a
ll ch
arita
ble
gifts
are
re
al e
state
. C
lose
ly-H
eld
Stoc
k D
educ
tion:
FM
V
C-C
orp
or S
-Cor
p T
hin
to n
on-e
xiste
nt m
arke
t, di
fficu
lt va
luat
ion,
self-
deal
ing
with
out
inde
pend
ent a
ppra
isal,
pre-
arra
nged
sa
le, S
-Cor
p U
BTI i
ssue
s
Idea
l for
FLI
P-C
RU
T w
ith n
o kn
own
liqui
datio
n ev
ent –
oth
er v
ehic
les w
ork
for c
orpo
rate
rede
mpt
ion
or m
arke
t sa
le
Priv
ate
com
pany
con
trib
utio
ns a
re v
ery
popu
lar p
rior t
o a
mar
ket s
ale.
S-C
orp
gifts
to
a tr
ust a
re ta
x-ef
fect
ive
prio
r to
sale
or t
o a
corp
orat
ion
if he
ld.
LLC
Int
eres
ts
Ded
uctio
n: F
MV
Tax
stat
us m
ay b
e co
rpor
ate
or
part
ners
hip
Sam
e as
Clo
sely
-Hel
dan
d ch
arac
teris
tics o
f und
erly
ing
asse
ts an
d po
tent
ial c
apita
l cal
ls, m
ultip
le
shar
ehol
ders
/ass
ets d
iffic
ult
Sam
e as
Clo
sely
-Hel
d C
harit
ies u
sual
ly w
ant t
he L
LC in
tere
st fo
r lia
bilit
y pr
otec
tion.
Mul
tiple
shar
ehol
ders
m
ake
this
optio
n di
fficu
lt.
Part
ners
hips
D
educ
tion:
FM
V
Gen
eral
, Lim
ited
or O
pera
ting
May
be
diffi
cult
or e
xpen
sive
to
appr
aise
, cha
ract
erist
ics o
f und
erly
ing
asse
ts, g
ener
al p
artn
ersh
ips h
ave
full
liabi
lity,
par
tner
ship
s with
neg
ativ
e ba
sis
Lim
ited
part
ners
hips
are
par
ticul
arly
go
od fu
ndin
g as
sets
for L
ead
Tru
sts.
For L
LCs a
nd P
artn
ersh
ips,
appr
aisa
l di
scou
ntin
g m
ay a
pply
.
Life
Ins
uran
ce/
Ann
uiti
es
Ded
uctio
n: L
esser
of
Adj
uste
d C
ost
Basis
or F
MV
Paid
-Up
and
Non
-Pai
d U
p Li
fe
Insu
ranc
e –
Var
iabl
e or
Fix
ed
Def
erre
d An
nuiti
es
Non
-pai
d up
pol
icie
s, “S
tran
ger-
Ow
ned”
or p
rem
ium
fina
nced
, or g
ifts
with
pol
icy
loan
s are
mor
e di
fficu
lt.
Paid
-up
who
le li
fe p
olic
ies w
ork
wel
l. An
nuiti
es tr
igge
r gai
n up
on tr
ansfe
r.
Life
insu
ranc
e is
an e
xcel
lent
life
-tim
e or
testa
men
tary
gift
s (th
roug
h be
nefic
iary
des
igna
tion)
. An
nuiti
es a
re
only
attr
activ
e as
testa
men
tary
gift
s be
caus
e of
IRD
.
Life
insu
ranc
e ca
n be
an
exce
llent
wea
lth
repl
acem
ent t
ool f
or a
ny p
lann
ed o
r out
right
gi
ft. P
rem
ium
s can
be p
aid
with
app
reci
ated
pr
oper
ty.
Min
eral
Int
eres
ts
Ded
uctio
n: V
aries
Oil/
Gas
Wor
king
or N
on-
Wor
king
Inte
rests
, Tim
ber,
Oth
er M
iner
als
Val
uatio
n di
fficu
lt, ta
x la
w v
ery
com
plex
and
stat
e ru
les m
ay g
over
n (e
.g.,
timbe
r).
Ver
y di
fficu
lt bu
t pos
sible
.T
hese
ass
ets a
re ty
pica
lly h
eld
in p
artn
ersh
ips
or L
LCs s
o th
ose
rule
s app
ly a
s wel
l.
Res
tric
ted
Stoc
k D
educ
tion:
FM
V Se
ctio
n 14
4 or
145
Ap
prai
sal r
equi
rem
ent,
lock
-up
perio
dR
estr
icte
d sto
ck c
an e
asily
be
used
for
just
abou
t eve
ry p
lann
ed g
ift
Res
tric
ted
stock
shou
ld b
eco
ordi
nate
d w
ith a
n ex
perie
nced
bro
ker.
Stoc
k O
ptio
ns
Ded
uctio
n: V
aries
Q
ualif
ied
(ISO
s) o
r non
-qu
alifi
ed
“In-
the-
mon
ey”
optio
n tr
ansfe
rs tr
igge
r ga
in to
the
dono
r at o
rdin
ary
inco
me
rate
s at t
he ti
me
of g
ift.
ISO
s can
be
exce
llent
fund
ing
asse
ts pr
ovid
ed th
ey a
re e
xerc
ised
and
then
he
ld fo
r ove
r a y
ear.
Qua
lifie
d re
plac
emen
t sto
ck fr
om a
n em
ploy
er
retir
emen
t pla
n/ES
OP
can
wor
k w
ell f
or b
oth
outr
ight
and
pla
nned
gift
s. C
olle
ctib
les/
Art
D
educ
tion:
Bas
is fo
r non
-rela
ted
use/F
MV
for
rela
ted
use
Art,
coin
s, an
tique
s V
alua
tion,
insu
ranc
e, st
orag
e,
tran
sact
ion
costs
, com
plex
stru
ctur
es
like
priv
ate
oper
atin
g fo
unda
tions
are
so
met
imes
use
s
Tan
gibl
e pr
oper
ty w
ork
fairl
y w
ell f
or
near
ly a
ll fo
rms o
f pla
nned
gift
s – c
ost
basis
ded
uctio
n is
an is
sue
how
ever
. T
esta
men
tary
gift
s are
idea
l.
New
PPA
200
7 ru
les s
ever
ely
tight
en p
artia
l in
tere
st ar
t gift
s. C
apita
l gai
ns ta
xes r
emai
n at
28
% fe
dera
l so
ther
e is
an e
xtra
tax
bene
fit in
ta
ngib
le p
rope
rty d
onat
ions
.
Inte
llect
ual
Pro
pert
y D
educ
tion:
Var
ies
Pate
nts,
roya
lties
, cop
yrig
hts
Rev
enue
or n
on-r
even
ue
prod
ucin
g
Val
uatio
n co
st, d
ispos
ition
pro
cess
Wor
k be
st as
testa
men
tary
gift
s to
rece
ive
step-
up in
bas
is.
2004
Act r
educ
ed a
ttrac
tiven
ess o
f pa
tent
/roy
alty
gift
to b
asis.
Thi
s tab
le h
as g
ener
al in
form
atio
n an
d sh
ould
not
be
relie
d up
on a
s tax
, leg
al o
r fin
anci
al a
dvic
e.
Cop
yrig
ht ©
2007
Cha
ritab
le So
lutio
ns, L
LC a
nd B
ryan
Clo
ntz,
CFP
® bry
an@
char
itabl
esolu
tions
llc.co
m (
404)
375
-549
6
Gift
Acc
epta
nce/
Man
agem
ent/
Dis
posi
tion
Con
side
rati
ons
for
Top
Ten
Non
-Cas
h A
sset
Con
trib
utio
ns
Thi
s tab
le h
as g
ener
al in
form
atio
n an
d sh
ould
not
be r
elie
d up
on a
s tax
, leg
al o
r fin
anci
al a
dvic
e.
Cop
yrig
ht ©
Cha
ritab
le So
lutio
ns, L
LC a
nd B
ryan
Clo
ntz,
CFP
® bry
an@
char
itabl
esolu
tions
llc.co
m (
404)
375
-549
6
Asse
t Typ
e Li
abili
ty/C
ost E
xpos
ure
Risk
Man
agem
ent/
Due
Dili
genc
e Ac
cept
ance
Issu
esSt
aff R
ole
Disp
ositi
on
Alte
rnat
ives
R
eal E
stat
e
Envi
ronm
enta
l, U
BTI,
liens
, IR
S pe
nalti
es, a
ccid
ent
clai
ms,
up-fr
ont d
ue
dilig
ence
exp
ense
, on-
goin
g ho
ldin
g co
sts, r
emed
iatio
n or
im
prov
emen
t cos
t, tim
e-to
-re
war
d ra
tio, f
iduc
iary
risk
Inde
mni
ficat
ion
lette
r, en
viro
nmen
tal a
udit,
su
rvey
, BPO
or a
ppra
isal,
insu
ranc
e, si
te
insp
ectio
n w
ith p
ictu
res,
dete
rmin
e pr
oper
ty’s
histo
ry, d
evel
op sa
les p
lan
- rev
iew
all
deed
s, le
ase
agre
emen
ts, re
ntal
agr
eem
ents,
insp
ectio
n re
port
s, do
nor s
houl
d co
mpl
ete
disc
losu
re
chec
klist
citi
ng a
ny k
now
n iss
ues,
outso
urce
to
anot
her c
harit
y
Con
flict
s of i
nter
est,
valu
atio
n, se
lf-de
alin
g, im
plie
d or
ex
pres
sed
restr
ictio
ns
Tax
subs
tant
iatio
n –
8283
/828
2, d
ue
dilig
ence
, cha
nge
insu
ranc
e/ut
ilitie
s, ex
ecut
e tr
ansfe
r doc
umen
ts, d
onor
co
mm
unic
atio
n, a
udit
prep
arat
ion,
m
anag
e di
spos
ition
N
ote:
One
per
son
shou
ld m
anag
e al
l ill
iqui
d as
sets.
1. H
old
(not
usu
ally
re
com
men
ded)
2.
Sel
l to
priv
ate
buye
r (un
rela
ted
part
y)
3. L
ist w
ith b
roke
r
Priv
atel
y-H
eld
Stoc
k/LL
C/
Part
ners
hips
Cap
ital c
alls,
inde
mni
ficat
ion
clau
ses,
lack
of c
ontr
ol w
ith
min
ority
gift
s, U
BTI a
nd
spec
ific
issue
s rel
ated
to
unde
rlyin
g pr
oper
ty
Inde
mni
ficat
ion
lette
r, in
depe
nden
t app
raisa
l, re
view
fina
ncia
ls if
appr
opria
te, d
evel
op sa
les
plan
, rev
iew
all
entit
y do
cum
ents
Thi
n to
non
-exi
stent
m
arke
t, di
fficu
lt va
luat
ion,
self-
deal
ing
with
out
inde
pend
ent
appr
aisa
l, S-
Cor
p U
BTI i
ssue
s
Tax
subs
tant
iatio
n –
8283
/828
2, d
ue
dilig
ence
, exe
cute
tran
sfer
docu
men
ts, d
onor
com
mun
icat
ion,
au
dit p
repa
ratio
n, p
ut st
ock
cert
ifica
te o
r ass
ignm
ent d
ocum
ent
in sa
fe.
Che
ck in
with
com
pany
an
nual
ly to
see i
f the
re h
as b
een
any
mat
eria
l cha
nge.
1. S
old
back
to
entit
y 2.
Sol
d in
ope
n m
arke
t tra
nsac
tion
3. S
old
to p
rivat
e un
rela
ted
buye
r
Life
Ins
uran
ce/
Ann
uiti
es
Virt
ually
non
e exc
ept a
s it
rela
tes t
o co
mpl
ex
foun
datio
n-ow
ned,
cha
rity-
owne
d an
d in
vesto
r ow
ned
cont
ract
s – so
split
inte
rest
gifts
are
allo
wed
.
IRS
has l
isted
a n
umbe
r of r
epor
tabl
e tr
ansa
ctio
ns –
be
caut
ious
to c
ompl
y w
ith
repo
rtin
g re
quire
men
ts. A
lso re
view
the
illus
trat
ion
or p
olic
y be
ing
cons
ider
ed a
nd h
ave
a m
emo
outli
ning
the
dono
r’s p
rem
ium
pay
ing
resp
onsib
ilitie
s and
the
char
ity’s
optio
ns fo
r no
n-co
mpl
ianc
e.
Wor
k w
ith a
gent
to
illus
trat
e an
y no
n-pa
id u
p (u
nive
rsal
or
varia
ble
life
polic
ies)
at
2%
und
er th
e cu
rren
t cre
ditin
g ra
te.
Tax
subs
tant
iatio
n –
8283
/828
2, d
ue
dilig
ence
, exe
cute
tran
sfer
docu
men
ts, d
onor
com
mun
icat
ion,
au
dit p
repa
ratio
n, m
anag
e po
licie
s an
nual
ly to
det
erm
ine
heal
th.
Put d
onor
in c
onta
ct w
ith a
qua
lifie
d in
sura
nce
appr
aise
r.
1. U
sual
ly h
eld
to
deat
h 2.
Cas
h su
rren
der t
o co
mpa
ny
3. R
educ
e pa
id-u
p 4.
Sol
d to
life
se
ttlem
ent
com
pani
es
Min
eral
Int
eres
ts/
Inte
llect
ual
Pro
pert
y
Non
e ot
her t
han
pote
ntia
l ca
pita
l cal
ls M
ore
than
any
oth
er a
sset
, hav
ing
a w
ell-
desig
ned
sale
s pla
n pr
ior t
o ac
cept
ance
is c
ritic
al
Mar
keta
bilit
y,
appr
aisa
ls T
ax su
bsta
ntia
tion
–82
83/8
282,
due
di
ligen
ce, e
xecu
te tr
ansfe
r do
cum
ents,
don
or c
omm
unic
atio
n,
audi
t pre
para
tion
1. H
old
(not
re
com
men
ded
unle
ss
stron
g in
com
e pa
ymen
ts)
2. S
old
via
brok
er
3. S
old
priv
atel
y R
estr
icte
d St
ock/
Stoc
k O
ptio
ns
Post-
cont
ribut
ion
loss
po
ssib
ilitie
s dur
ing
restr
icte
d or
hol
ding
per
iod
Rev
iew
all
restr
ictio
ns a
nd o
ptio
n ag
reem
ents
Non
e T
ax su
bsta
ntia
tion
–82
83/8
282,
due
di
ligen
ce, e
xecu
te tr
ansfe
r do
cum
ents,
don
or c
omm
unic
atio
n,
audi
t pre
para
tion
Sold
with
bro
ker a
s so
on a
s res
tric
tion
is lif
ted
Col
lect
ible
s/A
rt
Non
e ot
her t
han
post-
cont
ribut
ion
hold
ing
expe
nses
Rev
iew
hist
ory
of c
olle
ctio
n, d
ocum
ent w
ith
pict
ures
W
ork
with
bro
ker
/app
raise
r to
asse
ss
valu
e pr
ior t
o ac
cept
ance
Tax
subs
tant
iatio
n–
8283
/828
2, d
ue
dilig
ence
, exe
cute
tran
sfer
docu
men
ts, d
onor
com
mun
icat
ion,
au
dit p
repa
ratio
n, in
sura
nce,
stor
age
1. A
uctio
n sa
le
2. P
rivat
e bu
yer
3. B
roke
r
A
ddit
iona
l Rea
ding
s fo
r N
on-C
ash
Ass
ets
Rea
l Est
ate
1.
Pl
anne
d G
ivin
g D
esig
n C
ente
r – T
echn
ical
Rep
ort o
n R
eal P
rope
rty
(http
://w
ww
.pgd
c.co
m/u
sa/it
em/?
item
ID=6
0165
) 2.
G
ifts o
f Rea
l Esta
te –
(http
://w
ww
.pgd
c.co
m/u
sa/it
em/?
item
ID=2
3747
) 3.
G
old
in th
e gr
ound
: A P
ract
ical
Gui
de to
Dev
elop
ing
and
Acce
ptin
g G
ifts o
f Rea
l Esta
te, M
yerb
erg,
Nea
l - Jo
urna
l of G
ift P
lann
ing,
Vol
ume
10, N
umbe
r 2,
June
200
6 , p
p. 1
1-43
(33)
4.
R
eal E
state
Gift
s--B
eyon
d th
e Ba
sics,
Car
ovan
o, J.
; Nas
h, A
nne
Jour
nal o
f Gift
Pla
nnin
g, V
olum
e 7,
Num
ber 3
, 1 S
epte
mbe
r 200
3 , p
p. 5
-41(
37)
5.
Con
trib
utin
g M
ortg
aged
Pro
pert
y to
Cha
rity,
Pee
bles
, Lau
ra –
(http
://w
ww
.pgd
c.co
m/u
sa/it
em/?
item
ID=2
7287
) C
lose
ly-h
eld
Stoc
k/LL
C/P
artn
ersh
ips
1.
Pl
anne
d G
ivin
g D
esig
n C
ente
r – T
echn
ical
Rep
ort o
n Pr
ivat
ely-
Hel
d In
tere
sts (h
ttp://
ww
w.p
gdc.
com
/usa
/item
/?ite
mID
=604
31)
2.
Gift
Par
tner
ing
with
Ent
repr
eneu
rial D
onor
s, T
icco
ni, P
eter
Jour
nal o
f Gift
Pla
nnin
g, V
olum
e 4,
Num
ber 3
, 1 S
epte
mbe
r 200
0 , p
p. 1
1-33
(23)
3.
C
harit
able
Gift
s of S
ubch
apte
r S S
tock
: H
ow to
Sol
ve th
e Pr
actic
al L
egal
Pro
blem
s, H
oyt,
Chr
is (h
ttp://
ww
w.p
gdc.
com
/usa
/item
/?ite
mID
=247
92)
4.
Tax
Sav
ing
Opp
ortu
nitie
s for
Cha
ritie
s Ow
ning
Sub
chap
ter S
Sto
ck, P
eebl
es, L
aura
(http
://w
ww
.pgd
c.co
m/u
sa/it
em/?
item
ID=2
5732
) 5.
Is
sues
to C
onsid
er W
hen
Mak
ing
and
Acce
ptin
g G
ifts o
f Res
tric
ted
Stoc
k, F
rank
lin, J
and
She
vlin
, D (h
ttp://
ww
w.p
gdc.
com
/usa
/item
/?ite
mID
=281
16)
Life
Ins
uran
ce/S
tock
Opt
ions
/Col
lect
ible
s/In
telle
ctua
l Pro
pert
y
1
. L
ife In
sura
nce:
The
Goo
d, T
he B
ad a
nd th
e U
gly,
Mac
Nab
, JJ J
ourn
al o
f Gift
Pla
nnin
g, V
olum
e 5,
Num
ber 1
, 1 M
arch
200
1 , p
p. 1
7-44
(28)
2.
C
harit
able
Gift
s of L
ife In
sura
nce,
Clo
ntz,
B an
d Br
ink,
M. (
http
://w
ww
.pgd
c.co
m/u
sa/it
em/?
item
ID=2
7962
) 3.
N
avig
atin
g St
ock
Opt
ions
and
Oth
er S
tock
Rig
hts,
Ott,
D. a
nd L
ew, R
. (ht
tp://
ww
w.p
gdc.
com
/usa
/item
/?ite
mID
=272
35)
4.
Plan
ned
Giv
ing
Des
ign
Cen
ter –
Tec
hnic
al R
epor
t on
Inta
ngib
le P
rope
rty
(http
://w
ww
.pgd
c.co
m/u
sa/it
em/?
item
ID=6
0379
) 5.
Pl
anne
d G
ivin
g D
esig
n C
ente
r – T
echn
ical
Rep
ort o
n T
angi
ble
Prop
erty
(http
://w
ww
.pgd
c.co
m/u
sa/it
em/?
item
ID=6
0229
) G
ift A
ccep
tanc
e/M
anag
emen
t/D
ispo
siti
on
1.
U
nder
stand
ing
and
Dra
fting
Non
-Pro
fit G
ift A
ccep
tanc
e Po
licie
s, M
iree,
Kat
hryn
(http
://w
ww
.pgd
c.co
m/u
sa/it
em?it
emID
=266
63)
2.
The
Haz
ards
of U
nman
aged
Life
Insu
ranc
e Po
licie
s, Ba
rney
, A. (
http
://w
ww
.pgd
c.co
m/u
sa/it
em/?
item
ID=2
7755
)