Charity Donation Tax Benefits - Tax Deduction
Donations make good sense for both individuals and corporate donors. A Charity Donation provides you with a great way to enjoy what many consider a worthy tax deduction. If your asset has grown in value, or turned into a nonproducing property in your portfolio, it may be the time to consider a charitable donation. The equity from your charity donation helps us continue to benefit the many commendable causes we support. With Causes is here to provide you with the know-how necessary to conduct a donation that optimizes the benefits for both you, the donor, and those we serve.
Individual donors
These rules may apply if the donated asset is owned in your own
name, with your spouse or other persons.
(Please check with your tax professional):
If you have held the property for more than one year, it is
classified as long-term capital gain property.
You can deduct the full fair market value of the donated
property. Your charitable contribution deduction is limited to
various percentages of your adjusted gross income. Excess
contribution value may be carried forward for up to five years.
If the property has been depreciated, the fair market value must
be reduced by its accumulated depreciation through the date of
contribution.
Fair Market Value is most commonly determined by an
independent appraisal.
If you choose to deduct your cost basis of the donated property
you are allowed a deduction of fifty percent (50.00%) of your
adjusted gross income (Please check with your tax professional).
Excesses here again can be carried forward up to five years.
Which method you choose to follow is dependent on the cost basis
in the property donated, your tax bracket, the age and health of
the donor and whether you plan to make future contributions
(Please check with your tax professional).
Corporate Donors
The following rules apply if your charitable donation of real
property is made by a corporation:
If you have held a controlling interest in the corporation and
the property has been held for more than one year, the
corporation may deduct up to ten percent (10.00%) of the net
profit of the corporation (Please check with your tax
professional). Excess contribution amounts can be carried
forward up to five years. The fair market value here must be
reduced by the amount of accumulate depreciation.
If the corporate has elected "Sub. S" status, then the
contribution allowed will be reported on the individual
shareholders K1 and may be deducted on the individual return
(Please check with your tax professional).
Partnerships, S-Corporations and Limited Liability Companies
The following rules may apply if your contribution is being made
by a partnership,
S-Corporation or limited liability company:
The corporation may not claim a deduction for the property
donated.
Rather, the contribution passes to the individual shareholders
on a pro-rated based on their percent ownership in the S
corporation. The shareholder can claim this deduction on their
individual tax return. The same limits and carry forward rules
will apply (Please check with your tax professional).
Partnerships and limited liability company contribution rules
are the same as an S corporation with one exception the partners
or member can claim a deduction even if they have no basis in
the partnership or limited liability company. (Please check with
your tax professional)
The With Causes Charitable Organization membership is ever
growing. As an exercise of service to others, a growing body of
volunteers and affiliates who give freely of their time and efforts
that comprise much of our organization. This allows us to
give more freely and abundantly by fulfilling far more needs
throughout communities than would otherwise be possible.
