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FEATURED ADVISORJohn T. Sheridan, CPA, Senior Manager

MINIMUM NET WORTH REQUIREMENT$10 million (planning services)

MINIMUM FEE FOR INITIAL MEETINGNone required

LARGEST CLIENT NET WORTH$500+ million

EDUCATIONBA, economics and accountingCollege of the Holy Cross

PROFESSIONAL SERVICES PROVIDEDPersonal financial planning, personal business management, insurance/risk management advice and products, family office services, divorce consultation, valuation services, corporate executive services, strategic tax planning, tax compliance, estate planning and wealth transfer

ASSOCIATION MEMBERSHIPSAICPA, New Jersey Society of CPAs

EMAILjsheridan@cbiz.com

WEBSITEwww.cbiz.com

CBIZ MHM LLC 5 Bryant Park, New York, NY 10018 212.790.5730

L E A D I N G W E A L T H A D V I S O R | N E W Y O R K , N Y

I L L U S T R A T I O N B Y K E V I N S P R O U L S

What are the tax benefits of charitable giving? B Y J O H N T . S H E R I D A N

Left to right: John T. Sheridan, Donna Palumbo, Anthony Parrelli, Carol Alvarez, Marc J. Minker, Adam Dauber, Sookyoung Lee, Linda McCarty

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s Worth magazine celebrates the men and women who have set out to change their communities and the world for the better, it is fitting to consider one of the most effective and dynamic tools these individu-als have to achieve their goals: charitable giving.

Many financially successful individuals help their communities as a way to give back or “pay it forward." For most, the incentive is a desire to truly help others. For some, it is a way to establish their legacy. Either way, charitable giving has the extra benefit of mitigating their tax burden. Here, we’ll focus on the tax aspects of charitable giving.

The first step is to focus one’s giving on a philanthropic objective. There is usually a choice of public charities that support the same goal. The key is to find the one most closely aligned with the intended objective.

Some charities have a hyper-local focus, while others are statewide, national or even global in their reach. Web research tools can help identify and evaluate worthy public charities’ effectiveness at

achieving a specific charitable goal or mission. For example, the Internal Revenue Ser-

vice’s Exempt Organizations Select Check lists eligible charitable organizations. Oth-ers, such as Guidestar.org, provide more qualitative analysis.

From there, the next step is to decide how best to support the charity. Cash donations are the most straightforward and easiest to substantiate. To properly substantiate the

gift for tax purposes, obtain a charitable acknowledgement letter for gifts of $250 or more. An alternative but even more ef-fective method of giving is gifting a mar-ketable security, such as publicly traded stock that has appreciated in value, as long as the security has been owned by the individual for more than a year.

Subject to income limitations, these gifts provide a deduction equal to fair market value, and since the asset has not been sold, income tax on the appreciation is avoided. This becomes even more valuable for those subject to the 3.8 percent net investment income tax. Consulting your advisor to discuss your charitable goals can save you thousands of dollars in income tax annually.

While donating appreciated stock can be highly effective, it is wise to avoid donating any stock positions that are currently worth

less than what was paid for them. In that case, the best practice is to sell the stock to claim the loss and then donate the cash proceeds.

Charitable giving can also be a valuable strategy for reducing income taxes triggered by a one-time transaction, such as the sale of a business. Where the amounts involved are large enough, it makes sense to form a private foundation or contribute to a donor-advised fund.

Private foundations are typically corpora-tions formed under a not-for-profit state statute and required to operate for specific purposes, such as religious, charitable, sci-entific, literary or educational ones.

Here, a current charitable donation deduc-tion is available, of up to 30 percent adjusted gross income for cash donations or 20 per-cent for appreciated marketable securities held more than one year. The foundation is obligated to support public charities, but it may spread out donations over future years.

An alternative to a private foundation is a donation to a donor-advised fund. These funds are run by investment firms or large public charities and allow the donor to influence the use of the donation and investment choices for the fund. It goes without saying: Charitable giving has rewards beyond the tax benefit, and should be considered an integral part of year-end planning. Discussing the options with your advisor will help you maximize the tax benefits of charitable giving. l

This article is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. To the extent anything herein could be construed as tax advice, such advice is not intended to be used and cannot be used to avoid penalties under the Internal Revenue Code, or to promote, market or recommend to another person any tax-related matter. This information is general in nature and may be affected by changes in law or in the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

C B I Z M H M L L C

THE PRIVATE CLIENT SERVICES GROUP OF CBIZ NEW YORK PROVIDES

INNOVATIVE SOLUTIONS FOR MANAGING THE DAY-TO-DAY FINANCIAL

ADMINISTRATION ACTIVITIES OF FAMILY GROUPS AND HIGH NET WORTH

CLIENTS. For more than 40 years, CBIZ has developed numerous long-standing

relationships by simplifying the complexity and difficulty of handling routine

financial matters for its clients. As a result, CBIZ clients are able to enjoy the benefits

of their families, wealth and lifestyles, knowing their personal and administrative

needs are being handled with the highest level of integrity and professionalism. As

a nationally ranked Top Ten Accounting Provider (Accounting Today, 2015), CBIZ has a

multidisciplinary team of professionals uniquely positioned to implement an end-

to-end family office and personal business management approach with a full suite

of customized services. l

A B O U T U S

Charitable giving can be a valuable strategy for reducing income taxes triggered by a one-time transaction, such as the sale of a business.

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CBIZ MHM LLC is featured in Worth® 2017 Leading Wealth Advisors™, a special section in every edition of Worth® magazine. All persons and firms appearing in this section have completed questionnaires, have been vetted by an advisory group following submission by Worth®, and thereafter paid the standard fees to Worth® to be featured in this section. The information contained herein is for informational purposes, and although the list of advisors presented in this section is drawn from sources believed to be reliable and independently reviewed, the accuracy or completeness of this information is not guaranteed. No person or firm listed in this section should be construed as an endorsement by Worth®, and Worth® will not be responsible for the performance, acts or omissions of any such advisor. It should not be assumed that the past performance of any advisors featured in this special section will equal or be an indicator of future performance. Worth®, a publication of the Worth Group LLC, is a financial publisher and does not recommend or endorse investment, legal or tax advisors, investment strategies or particular investments. Those seeking specific investment advice should consider a qualified and licensed investment professional. Worth® is a registered trademark of the Worth Group LLC.

John T. Sheridan, CPA Senior Manager

CBIZ MHM LLC5 Bryant Park

New York, NY 10018Tel. 212.790.5730

jsheridan@cbiz.com www.cbiz.com

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