When Donating Non-Cash Gifts, Timing and Valuation is Important
Donating non-cash gifts like privately held stock can be tax-advantageous for you, but the donation process requires planning and a carefully laid out timeline that simple gifts of cash do not.
Gifts of non-cash (or complex) assets can help you meet significant charitable goals while potentially avoiding capital gains tax when appreciated property (held longer than a year) is sold. However, there are guidelines you must be aware of in order to properly claim a charitable gift deduction.
While there are many items to review prior to making the donation, the timing of the gift transaction and the valuation of that gift are particularly important. For example, real estate must be donated before there is a signed purchase and sale agreement in order to receive a tax deduction.
For most non-cash gifts (generally greater than $5,000), the Internal Revenue Service requires that these assets be valued by a qualified appraiser. This can be a lengthy task for real estate, privately held corporations or anything not priced by a public market. By and large, the valuation placed on the asset establishes the amount of the charitable tax deduction.
While donating cash is still a popular way to give, you should consider two questions:
- What is the most tax-advantageous asset to donate? (By the way, it’s almost never cash.)
- When is the best time to donate that gift?
If you decide to donate a non-cash gift to your favorite charity, consult your tax advisor and give him or her plenty of time to provide you with proper guidance. Non-cash gifts will take longer to process, but can result in greater tax savings along with significant impact for your favorite charitable cause.
We’d love to help you with your charitable giving. Please reach out to the Community Foundation of Tampa Bay at (813) 282-1975 or visit www.cftampabay.org to get started.
Sheila Kinman, CAP®
Senior Vice President-Philanthropy
Community Foundation of Tampa Bay
Sheila Kinman, CAP® is the Senior Vice President of Philanthropy at the Community Foundation where she helps donors design and fulfill their charitable giving goals. She is also a Charted Advisor in Philanthropy (CAP®), a designation that provides knowledge for guiding charitable individuals, businesses and foundations.