When most people think of gifts, they think of cash gifts. But when it comes to charitable gifts, there may be a better way. Scouting, of course, always appreciates cash gifts – but cash gifts often affect your cash flow and usually represent after-tax dollars. You may not realize that non-cash gifts may have the same impact as cash gifts on your tax liability – and, in some instances, may offer an even better tax outcome.
Cash and Checks
Gifts of cash are the most basic and important source of support for Scouting – they are easy and popular.
Publicly Traded Securities
For many donors, gifts of stocks or bonds can provide tax benefits that are even greater than for cash gifts—especially if those securities have appreciated in value.
Closely Held Stock
Often very highly appreciated in value (and expensive to sell). In fact, some donors use these gifts as a way to indirectly transfer ownership to others such as family members, or regain control of the shares and establish a new cost basis for them. The advantages of closely held stock are similar to those of publicly traded stock gifts, but an appraisal may be required to establish market value of shares
Stock options can be a valuable and often “painless” gifts to a local council, as you are giving away something you don’t actually own yet. But gifts of stock options can pose certain challenges. For example, gifts of stock options will not produce an immediate tax deduction. The value of the gift won’t be known until after the option is exercised: when it is, your deduction equals the difference between the option price and the stock value. In fact, some stock options may not be contributed, under the terms of the option. If considering such a gift, consult your governing option agreement and advisers.
As with many people, your real estate holdings may be your most valuable assets. These assets can also carry a high price: property tax and maintenance costs, if held; capital gains tax, if sold. A gift to the BSA of real property—residential, rental, vacation homes, farms, commercial, or undeveloped—may offer significant benefits.
Before deciding how to give real property, know (1) the appraised value of the property and (2) your basis and any debts or liens on the property. Also, please discuss your gift with the BSA so there is a mutual understanding about whether the property will be used, sold, or if there are any environmental concerns.
An outright gift of real property can save you time and money. | Avoid continued maintenance costs and capital gains tax on any appreciation in the value of the property.
Bargain Sales and Gift/Sales
Gifts of real estate are not all-or-nothing propositions. You may donate a partial interest in the land—or certain land rights—instead of donating the entire property. When the property is sold, the proceeds are distributed accordingly. This is a gift/sale arrangement.
Another option is the bargain sale. Just like it sounds, the donor sells the property to the council at a bargain; it’s part sale, part gift.
Life Estate Gifts
You may plan to contribute a home, vacation home, or farm to Scouting sometime in the future but—for now—you still want to use the property. A life estate helps you do both. A life estate gift grants Scouting the right to your property after your lifetime, but you retain the right to use and enjoy it for the rest of your life and/or the life of another. If the property is income-producing (e.g., from rent, crops, timber, etc.), you may also keep that income during your lifetime.
- If you make a life estate gift and later decide you no longer want to use your property, simply transfer your remaining rights in the property to the council.
Personal and Income Producing Property
Whether through inheritance, collecting, or investment, you’ve probably accumulated a lot of things. Sometimes these are inherently valuable; sometimes the value is purely sentimental; sometimes they are costly to insure or difficult to sell. Gifts of art, collectibles (such as stamps or coins), antiques, boats or cars, or other items of personal property may be great alternatives.
Information contained herein was accurate at the time of posting. The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Charitable giving vehicles described herein are offered only in areas where permitted by law. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results.