1 national capital gift planning council planned giving days

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Gifts of Assets:Show Your Donor How To Stuff It!

May 29, 2014

National Capital Gift Planning CouncilPlanned Giving Days

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Demographics of U.S. Wealth

Population Percent

Share of Wealth

Their Issues Motivation

Ninety Third Passion Mission

Nine Third Taxes Tax Mitigation

One Third Control Family/Legacy

©Steenhuysen Associates 2014

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Income brackets Income tax rate

Cap gain rate

Surtax rate

$457,601 + 36.9% 20% 3.8%

$405,101 - $457,600 35% 15% 3.8%

$226,851 - $405,100 33% 15% 3.8% (over$250,000)

$148,851 - $226,850 28% 15% None

$ 73,801 - $148,850 25% 15% None

Our Donor’s Tax Obligations


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Full PortfolioCash & other

0102030405060708090

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Business equityResidentialCash & otherDomestic bondsForeign stocksDomestic Stocks

How Donors Hold Their Wealth


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Long-term appreciated property (a year and a day) for the best deduction

Any asset can be given to a charity Must itemize to use the deduction May require an appraisal Not all assets are good gifts

Conditions for a Gift of Assets


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Big business in the 1990s Market collapse in March 2000 Two missing elements

◦ Costly capital gains tax◦ Asset appreciation

Post recession in 2010s◦ Tax rates are up◦ Appreciation is back

Importance of Wealth Effect Every day in 2014 is your birthday!

Three Decades of Asset Gifts


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Assets That Can Be Gifted

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“Contributing complex assets to charity, however, can be complicated and is fraught with technical requirements and potential pitfalls.”

Never say NO for the donor

Gifts of Assets


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Investments Real estate Business interests Tangible personal property Complex assets Other stuff

Asset Categories for Gifts


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Publicly traded stockBondsMutual funds

Investments


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ResidentialRentalCommercialRaw

Real Estate


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C CorpS CorpLLCLLPPartnerships

Business Interests


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ArtCollectables JewelryCars, boats and planes

Tangible Personal Property


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Privately held companiesHedge fundsRestricted stockLimited partnership interests

Complex Assets


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Crops, timber, oil & gas interest, MLPs, horses, life insurance, copyrights, patents, classic car, shopping mall, antique desk, etc.

Other Stuff


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Interesting the Donor in a Gift of Assets

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If they say no, it is still good for you.◦ You find out more detail about the donor: how to be asked, when to

be asked◦ You differentiate your self from other fundraisers

It they say yes, it is even better for you.◦ Window into the donor’s wealth◦ The 300% solution

Your Case for Asking for Gifts of Assets


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Charitable giving is one of the few things you can do with your assets (keep, sell or give) versus giving cash (spend on anything, save or give).

You benefit in three ways when making a gift with assets:◦ Increases your cash flow◦ Avoid capital gain taxes on the appreciated portion of the asset◦ Provides you with a charitable income tax deduction for the full fair

market value of the asset

The Donor’s Case to make a Gift of Assets


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5 years ago donor bought 1000 shares of Cisco stock for $10

Today the shares are worth $30 a share◦ What is the fair market value of the stock?◦ What is the capital gain amount?◦ Assuming a 18.8% capital gain tax rate, what is the tax avoidance?◦ Assuming a 35% income tax rate, what is the tax savings?

Featuring a Gift of Assets


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In 2012 only 3% of charitable giving was done with assets. Impediments to assets gifts:

◦ It’s a bad asset.◦ Complexity◦ The organization◦ The fundraiser

Why Aren’t There More Asset Gifts?


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Close you eyes and picture your CFO and Corporate Attorney◦ Policies and approval◦ Due diligence◦ Accepting the gift◦ Processing the gift◦ Crediting the gift

Another way

Handling an Asset Gift


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Many DAFs now offer themselves as a conduit for asset gifts.

Resources:◦ eCurrency - http://www.siliconvalleycf.org ◦ Cars - http://www.donateacar.com/charities.php◦ Boats - http://www.actiondonation.org/DonateBoat.html◦ Planes - http://www.cardonationonline.org/donateaircraft.htm◦ Real estate - http://www.realestateforcharities.org/services/◦ TPP - http://idonate.com/in-kind/ ◦ Business interests & complex assets –

www.Nationalcommunityfoundation.org

Your Friendly DAF Charity


http://www.siliconvalleycf.org/

http://www.siliconvalleycf.org/

http://www.donateacar.com/charities.php

http://www.actiondonation.org/DonateBoat.html

http://www.actiondonation.org/DonateBoat.html

http://www.cardonationonline.org/donateaircraft.htm

http://www.cardonationonline.org/donateaircraft.htm

http://www.realestateforcharities.org/services/

http://idonate.com/in-kind/

http://idonate.com/in-kind/

http://www.nationalcommunityfoundation.org/

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Make no assumptions◦ What a donor does for work does not mean that is how they make

their money.◦ Don’t be fooled by lifestyle, either way.

Questions to begin the conversation◦ “Have you ever made a gift of stock to a charity?”◦ “Have you ever considered fulfilling your gift with something other

than cash?” When you are asked a tough question

◦ “I don’t know, but I know someone who does.”

Talking About the Donor’s Money


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“Before I accept this generous gift to our organization, let me ask you one question. What makes it possible for you to make a gift of (x amount) in cash to our organization?”

If You Can Only Ask One Question


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IPOBuyoutMergerUnit saleESOP

Events That Can Trigger The Conversation

Business Events Personal Planning

TaxEstateFinancialRetirementCharitable


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Three Cases of Asset Giving Virtual Currency Crop Carried interest


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A Gift of Virtual Currency What it is? Virtual currency is a currency that is unregulated

by traditional financial actors, such as central banks controlled by a sovereign government.

How is it treated? IRS 2014-21 says for federal tax purposes, virtual currency is treated as intangible personal property.


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How is it valued? For U.S. tax purposes, transactions must be reported in U.S. dollars.

What’s the deduction? FMV for LTCG currency; basis for STCG.

What’s the donor’s benefit? Charitable deduction applicable to capital gain treatment.

A Gift of Virtual Currency


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What is it? A basic good used in commerce that is interchangeable with other commodities of the same type.

How is it treated? Harvested crops are deemed tangible personal property and are subject to related use rules.

A Gift of Soybean Crop


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How is it valued? As a commodity, soybeans are traded on an exchange which establishes a price on any given trading day.

What’s the deduction? None. However, the farmer will be able to exclude the value of the crop from their taxable income.

What’s the donor’s benefit? Reducing taxable income.

A Gift of Soybean Crop


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What is it? A right that entitles the GP of private equity or hedge fund to a share of the profits.

How is it treated? Investment profit taxed as capital gain.

How is it valued? Projected cash flows discounted to present value.

A Gift of Carried Interest


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What’s the deduction? FMV for LTCG currency; basis for STCG.

What’s the donor’s benefit? Charitable deduction applicable to capital gain treatment.

A Gift of Carried Interest


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Gifts of assets create a whole new realm for gift solicitation and fulfillment.

Fundraisers will need to raise the issue with donors to access this opportunity available through gifts of assets.

It begins with asking questions and raising the possibilities.

Conclusion


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Questions?

Thank you. Jay SteenhuysenSteenhuysen Associates

1539 Fall River Ave., Suite 3Seekonk, MA 02771

[email protected]


1 national capital gift planning council planned giving days

Documents

asset slide

donor slide

days slide

solution slide

fundraiser slide

way slide

good gifts slide

capital gain tax rate