For the charitably inclined, the end of the year often brings an outpouring

of opportunities to make charitable donations. Whether it's a solicitation

from your alma mater or a request from your church, writing a check is the

easiest way to donate. But there are a number of other ways you can help

your favorite charity and benefit your own tax situation as well. The

Georgia Society of CPAs offers the following advice.

GIVE APPRECIATED ASSETS

While a check may be the easiest, non-cash gifts can give a charity more and

cost you less. The next time you plan to make a sizable donation to your

favorite charity, review your portfolio to see if there are any securities

that have appreciated in value that you could donate instead. Giving stock

instead of cash is an excellent way for you to save on taxes while

benefiting your charity of choice. When you donate appreciated property held

longer than one year, you can write off the full fair market value of your

donation, plus you don't owe any capital-gains tax on the profit you would

have realized if you sold the asset.

DONATE PROPERTY

Many charities are making it easier for you to donate property you no longer

need. For example, more and more organizations are willing to make all the

arrangements for donating an old car, including transferring the title and,

if necessary, towing the vehicle away. Whether you donate an old car, used

clothes, or worn furniture, your tax deduction is equal to the donated

item's fair market value — meaning what you would get if you currently sold

the item outright. If the value of your gift is $250 or more, however, you

must obtain a written acknowledgment that includes a complete description of

the donated property to verify the contribution for tax purposes. In

addition, if the value of your property donations exceeds $500, you must

report your donations on Form 8283. You'll need a professional appraisal as

well if the value of your non-cash donation exceeds $5,000.

Special rules apply when you donate tangible personal property, such as art.

Tax law specifies that you qualify for a full deduction for the fair market

value of the property only if the items are used in the course of the

charity's charitable function. For example, donating a valuable painting to

an art museum would qualify you to deduct the gift's full market value.

However, if you were to donate the same painting to a social services

agency, your deduction may be limited to your basis in the property — that

is, what you paid for it — rather than its appreciated value. To

substantiate your deduction, CPAs suggest you get a confirmation letter from

a charity which will use your gift in connection with its main activity or

purpose.

SET UP CHARITABLE TRUSTS

A charitable trust can be a valuable tool for people planning substantial

donations. In the case of a charitable remainder trust, you donate (on an

irrevocable basis) cash or property to the trust and you, a family member,

or other beneficiaries receive income from the trust for a set period of

time, or for as long as you live. At the end of that time period, the

property passes to the charity. When you establish a charitable remainder

trust, you receive a current deduction for the present value of the gift

that the charity will receive in the future and you receive a continuing

stream of income from your property. However, since the Taxpayer Relief Act

of 1997 tightened regulations concerning charitable remainder trusts, you

might want to consult a CPA before establishing one.

A charitable lead trust is the opposite of a charitable remainder trust. You

donate cash or property to a trust and the charity gets the income while

you're alive. Then, at your death, the assets revert to your estate. In the

meantime, you receive an up-front deduction for the value of the income

stream that will go to the charity.

DONATE LIFE INSURANCE

Another option is to donate your life insurance policy to charity. You may

deduct the value of a life insurance policy, if the charity is irrevocably

named as owner and beneficiary of the policy. (Simply naming a charity the

beneficiary of a policy does not earn you any tax benefits.) The amount of

your deduction depends on the type of policy you donate. Your insurance

company can help you calculate your deduction. If you continue to pay the

premiums on the policy, you generally may deduct the cost of the premiums.

(Gifts of insurance are not allowed in Vermont.)

The more you make Uncle Sam a partner in your generosity, the more generous

you can afford to be. If you're planning to make a sizable gift to a

charity, consult with a tax professional for advice on how to make the most

of your donation for both you and the charity.

The GSCPA is the premier professional organization for CPAs in the state of

Georgia. With over 10,000 members throughout the state, the purpose of the

GSCPA is to promote the study of accountancy and applicable laws, provide

continuing professional education, maintain high ethical and work standards,

and provide information about accounting issues to the membership and the

public. For more information, access our web site at www.gscpa.org

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