“unrelated” tangible personal property to a public charity By Angel melgosa Valuation and Income limits for
Relevant Client Information John Brown (age 50) is a Vice President of Loans & Jane Brown (age 52) is a High School English teacher. Both volunteer their time at the YMCA in their city and would like to make a charitable contribution to the YMCA but their funds are tied up. Combined AGI of $150,000 No children Both collect art work and paid $20,000 for a painting 10 yrs ago now valued at $50,000. Would like to give the painting to their niece, Joselyn, since they have no children, they are remodeling their home, and she is an Arts Major.
Charitable Contribution of Tangible Personal Property for “unrelated” use Basics 50% Deduction of AGI can be taken BUT ONLY the cost of the tangible property can be used as the deduction NOT FMV. ( Tangible Personal Property) (Public Charity)
Alternative #1 “Giving the artwork to Joselyn” No Tax Advantage And YMCA gets nothing
Alternative #2 “Contribute artwork to YMCA” $20,000 tax deduction and went from 28% tax bracket to 25% tax bracket; Joselyn gets nothing.
Alternative 3 “Selling artwork and contributing to YMCA” Cost $20,000 Sold $50,000 Gain $30,000 15% tax on Gain $20,000 can be gifted to Joselyn to start her own art collection! $25,500; More Money to give, More Money Saved on tax, and Reduced Tax Bracket! AND
We Recommend… Alternative #1 Alternative #2 Alternative #3 WINNER!!!