Making a larger charitable gift in 2013 may offer certain advantages
As you have likely read or heard, the special tax rates on long-term capital gains expired in 2012 and now stand at 20 percent (or 10 percent if a taxpayer is in the 15 percent tax bracket) – plus capital gain income is also being taxed an additional 3.8 percent for Medicare.
Donors making larger gifts usually consider tax efficiency in their decision-making process, and many financial advisors tell us they are urging clients to consider gifting highly appreciated securities to charities in 2013 so as to maximize tax efficiency. Such gifts qualify for a charitable gift deduction at 100 percent of market value (to the extent provided by law) at the time of gift – even though the donor's cost basis may be significantly lower. The transaction is also free of any capital gain tax burden as it is the tax-exempt charity – Millikin – that will sell the securities in order to realize the gift.
Another tax efficient way to give will expire at midnight Dec. 31, 2013. The Charitable IRA Rollover option opens the door for donors aged 70.5 or older on the date of the gift to fund a commitment to a qualified charity of up to $100,000 and the distribution counts against the donor’s RMD (required minimum distribution). Donors who meet the age minimum and don’t have to rely on the income from their IRA in 2013 may find this a “tax-neutral” way to give generously to Millikin.
FOR MORE DETAILS
As always, consult your financial advisor to see what works best for your particular situation and contact Millikin’s Alumni & Development Office at 217-424-6383 (1-877-568-2586 toll-free) if you have any questions about how to make a gift of stock or how to authorize a charitable IRA rollover to Millikin.