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Tax efficient charitable giving

Posted on 5/5/21 at 11:03 pm
Posted by GulfCoastPoke
Port of Indecision
Member since Feb 2011
1087 posts
Posted on 5/5/21 at 11:03 pm
Anyone have any thought, experience or suggestions in this subject? I would like to donate as tax efficiently as possible with the minimum goal to donate appreciated shares of stock, and be able to do so with any charitable organization or church (some accept stock transfers, many do not). The research I’ve found had lead me to a Donor Advised Fund, and it looks good on the surface. Not sure if there are better arrangements out there or if there are other factors at play. Aside from avoiding capita gains, it seems lumping donations into a single year will also increase deductions for that year...

Any insight appreciated!
Posted by LSUFanHouston
NOLA
Member since Jul 2009
37093 posts
Posted on 5/6/21 at 8:35 am to
If you are over 70 1/2, you can make a Qualified Charitable Distribution, which is a distribution from your retirement account. People use this to satisfy their RMD requirement (even thought RMDs are now needed at age 72, the QCD age remained the same).

So say you have a $12,000 RMD. You can have that RMD directed to charity. You don't get a deduction, but, you don't have to pay taxes on the RMD, either. You can do this with an RMD up to 100K per year.

Beyond that, donating appreciated stock is very good, just keep in mind the annual limits (which are a percentage of your AGI - there is a 5 year carryforward if you exceed it).

Donor Advised Funds are good if you want to make larger lump contributions but don't want to give it all to a charity at once... you can kind of "park" the donation but get the deduction up front.

The next level is Charitable Remainder Annuity Trusts and Charitable Remainder Unitrusts, which involve you donating a pile of assets to a specialized trusts, you get a stream of income from the trust, and when you die, the remainder of the trust goes to charity. You get an upfront deduction based on calculations. The stream of income to you each year is taxable (but it would be anyways if you invested that money yourself).

Finally you have the IRS' most hated donation - the conservation easement. You can invest in these and get rather large up front deductions. Just know that the IRS is absolutely auditing the heck out of these, and a lot of them are being found non-compliant, which is not good.
Posted by GulfCoastPoke
Port of Indecision
Member since Feb 2011
1087 posts
Posted on 5/6/21 at 9:40 am to
Thank you very much for taking the time to share you’re thoughts and expertise, I appreciate it!
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