All slides are
taken from this
book which
includes
detailed
explanations of
all concepts.
Available from
Amazon.com
Full c...
What is it?
When a donor
gives some
rights to
property but
keeps others
Charity I give you
this car, but I keep
the right to use it
for 1 year.
Can I deduct
current value less
1 year of
deprecia...
I can’t seem to rent out my office
building, so I’ll donate its use to
charity for a year. Can I deduct?
I give the charity my land, but I
keep all rights to extract minerals
Normally, donor
can’t keep some
rights and
deduct a partial
interest
gift
Charity I give you
this car, but I keep
the right to use it
for 1 year.
No deduction if
any ownership
rights are
retained.
No deduction if any ownership rights
are retained (I still own rental
property)
No deduction if ownership rights
are retained (I own minerals)
Normally, donor
can’t keep some
rights and
deduct a partial
interest
gift
If I could take the
deduction now, what
would be left for the
charity in 1 year?
I give charity this car, but
keep the rig...
I give charity the right to
use my newly planted
olive tree orchard for 7
years.
Olive trees don’t
produce for the
first s...
Charity I give you my
$2,000,000 company, but
keep the right to buy it back
in 3 years for $2,000,000.
[Can I deduct $2,00...
Normally, donor
can’t keep some
rights and
deduct a partial
interest
gift
The donor can deduct
if he gives all or an
“undivided portion”
of his interest
Other Exceptions
• Remainder interest in a
...
I can’t cheat the charity by making my share
more valuable if (1) I give away everything I own
or (2) I own exactly the
sa...
Divided share v. undivided share
Rights to walnuts from
specific tree branches
Divided
Share
A 15% ownership interest in t...
Rights to walnuts from
specific tree branches
Divided
Share
A 15% ownership interest in the whole tree
Undivided
Share
My ...
Rights to walnuts from
specific tree branches
Divided
Share
A 15% ownership interest in the whole tree
Undivided
Share
My ...
Divided
Share
Undivided
Share
I donate a
West Texas
cotton farm,
but keep all the
mineral rights
A 15% ownership interest ...
Divided
Share
Undivided
Share
I donate a
West Texas
cotton farm,
but keep all the
mineral rights
A 15% ownership interest ...
Divided
Share
Undivided
Share
I donate a 5%
interest as tenants
in common in a
West Texas cotton
farm including all
the mi...
Divided
Share
Undivided
Share
I donate a 5%
interest as tenants
in common in a
West Texas cotton
farm including all
the mi...
Divided
Share
Undivided
Share
I donate a
painting, but
keep all digital
and
reproduction
rights
A 15% ownership interest i...
Divided
Share
Undivided
Share
I donate a
painting, but
keep all digital
and
reproduction
rights
A 15% ownership interest i...
Divided
Share
Undivided
Share
I donate a 1/12
ownership
interest in a
painting including
the right to
possess 1 month
of e...
Divided
Share
Undivided
Share
I donate a 1/12
ownership
interest in a
painting including
the right to
possess 1 month
of e...
Fractional shares in tangible
personal property
• Deduction is lesser of
value during first or
later transfers
• All of th...
What happens if I don’t transfer the
rest of it to charity within 10 years?
Recapture
Previous
deductions are
counted as
ordinary income,
plus interest, plus
a 10% penalty
Rights to walnuts from
specific tree branches
Divided
Share
A 15% ownership interest in the whole tree
Undivided
Share
My ...
I can deduct a gift of all or an undivided share of all
my rights even if I own only a partial interest
All of
donor’s
int...
I give my land to a charity
although I never owned the
mineral rights
All of
donor’s
interests
Undivided
share of
donor’s
interests
5% ownership in my rights
My Ownership Rights My Gift
Rights...
I give a 5% interest as tenants
in common in my land to a
charity although I never
owned the mineral rights
All of
donor’s
interests
Undivided
share of
donor’s
interests
5% ownership in my rights
My Ownership Rights My Gift
Rights...
Next I give 11/12 interest in
my life estate, keeping the
right to use every September
Deductible as gift of
remainder int...
All of
donor’s
interests
Undivided
share of
donor’s
interests
11/12 ownership in my rights
My Ownership Rights My Gift
Rig...
If all interests are given to charity, each
divided portion is deductible
To:
The Salvation
Army
To:
The Red Cross
To:
Tex...
Summary
If you don’t give or share all of your rights,
you get no deduction
(unless it is a designated exception)
Help me
HERE
convince my bosses that continuing to build and
post these slide sets is not a waste of time. If
you work for...
If you clicked on
the link to let
me know you
reviewed these
slides…
Thank
You!
This slide set is from the curriculum for
the Graduate Certificate in Charitable
Financial Planning at Texas Tech
Universi...
Charitable Gifts of Partial Interests in Property
Charitable Gifts of Partial Interests in Property
Charitable Gifts of Partial Interests in Property
Charitable Gifts of Partial Interests in Property
Charitable Gifts of Partial Interests in Property
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Charitable Gifts of Partial Interests in Property

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These slides are taken from the graduate financial planning course "Introduction to Charitable Planning" at Texas Tech University. Details at www.EncourageGenerosity.com

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Charitable Gifts of Partial Interests in Property

  1. 1. All slides are taken from this book which includes detailed explanations of all concepts. Available from Amazon.com Full color version available at www.createspace.com/4707238
  2. 2. What is it? When a donor gives some rights to property but keeps others
  3. 3. Charity I give you this car, but I keep the right to use it for 1 year. Can I deduct current value less 1 year of depreciation?
  4. 4. I can’t seem to rent out my office building, so I’ll donate its use to charity for a year. Can I deduct?
  5. 5. I give the charity my land, but I keep all rights to extract minerals
  6. 6. Normally, donor can’t keep some rights and deduct a partial interest gift
  7. 7. Charity I give you this car, but I keep the right to use it for 1 year. No deduction if any ownership rights are retained.
  8. 8. No deduction if any ownership rights are retained (I still own rental property)
  9. 9. No deduction if ownership rights are retained (I own minerals)
  10. 10. Normally, donor can’t keep some rights and deduct a partial interest gift
  11. 11. If I could take the deduction now, what would be left for the charity in 1 year? I give charity this car, but keep the right to use it for 1 year.
  12. 12. I give charity the right to use my newly planted olive tree orchard for 7 years. Olive trees don’t produce for the first seven years
  13. 13. Charity I give you my $2,000,000 company, but keep the right to buy it back in 3 years for $2,000,000. [Can I deduct $2,000,000?] Our only product is a new cancer drug that will be approved or rejected by the FDA in 3 years
  14. 14. Normally, donor can’t keep some rights and deduct a partial interest gift
  15. 15. The donor can deduct if he gives all or an “undivided portion” of his interest Other Exceptions • Remainder interest in a home or farm • Charitable remainder/ lead trust or pooled income fund • Qualified conservation easement
  16. 16. I can’t cheat the charity by making my share more valuable if (1) I give away everything I own or (2) I own exactly the same rights as the charity – just a different percentage
  17. 17. Divided share v. undivided share Rights to walnuts from specific tree branches Divided Share A 15% ownership interest in the whole tree Undivided Share My Ownership Rights My Gift A walnut tree
  18. 18. Rights to walnuts from specific tree branches Divided Share A 15% ownership interest in the whole tree Undivided Share My Ownership Rights My Gift A walnut tree A divided share is not deductible
  19. 19. Rights to walnuts from specific tree branches Divided Share A 15% ownership interest in the whole tree Undivided Share My Ownership Rights My Gift A walnut tree An undivided share of property is deductible
  20. 20. Divided Share Undivided Share I donate a West Texas cotton farm, but keep all the mineral rights A 15% ownership interest in the whole tree Rights to walnuts from specific tree branches Divided or undivided share?
  21. 21. Divided Share Undivided Share I donate a West Texas cotton farm, but keep all the mineral rights A 15% ownership interest in the whole tree Rights to walnuts from specific tree branches Not Deductible
  22. 22. Divided Share Undivided Share I donate a 5% interest as tenants in common in a West Texas cotton farm including all the mineral rights A 15% ownership interest in the whole tree Rights to walnuts from specific tree branches Divided or undivided share?
  23. 23. Divided Share Undivided Share I donate a 5% interest as tenants in common in a West Texas cotton farm including all the mineral rights A 15% ownership interest in the whole tree Rights to walnuts from specific tree branches Deductible
  24. 24. Divided Share Undivided Share I donate a painting, but keep all digital and reproduction rights A 15% ownership interest in the whole tree Rights to walnuts from specific tree branches Divided or undivided share?
  25. 25. Divided Share Undivided Share I donate a painting, but keep all digital and reproduction rights A 15% ownership interest in the whole tree Rights to walnuts from specific tree branches Not Deductible
  26. 26. Divided Share Undivided Share I donate a 1/12 ownership interest in a painting including the right to possess 1 month of every year A 15% ownership interest in the whole tree Rights to walnuts from specific tree branches Divided or undivided share?
  27. 27. Divided Share Undivided Share I donate a 1/12 ownership interest in a painting including the right to possess 1 month of every year A 15% ownership interest in the whole tree Rights to walnuts from specific tree branches Deductible, if…
  28. 28. Fractional shares in tangible personal property • Deduction is lesser of value during first or later transfers • All of the donor’s rights must be given to charity within 10 years (or at donor’s death if earlier)
  29. 29. What happens if I don’t transfer the rest of it to charity within 10 years?
  30. 30. Recapture Previous deductions are counted as ordinary income, plus interest, plus a 10% penalty
  31. 31. Rights to walnuts from specific tree branches Divided Share A 15% ownership interest in the whole tree Undivided Share My Ownership Rights My Gift A walnut tree When can I deduct a gift of partial rights?
  32. 32. I can deduct a gift of all or an undivided share of all my rights even if I own only a partial interest All of donor’s interests Undivided share of donor’s interests 15% ownership in my rights Rights to walnuts from specific tree branches My Ownership Rights My Gift Rights to walnuts from specific tree branches
  33. 33. I give my land to a charity although I never owned the mineral rights
  34. 34. All of donor’s interests Undivided share of donor’s interests 5% ownership in my rights My Ownership Rights My Gift Rights to walnuts from specific tree branches I give my land to a charity, although I never owned the mineral rights
  35. 35. I give a 5% interest as tenants in common in my land to a charity although I never owned the mineral rights
  36. 36. All of donor’s interests Undivided share of donor’s interests 5% ownership in my rights My Ownership Rights My Gift Rights to walnuts from specific tree branches I give a 5% interest as tenants in common in my land to a charity, although I never owned the mineral rights
  37. 37. Next I give 11/12 interest in my life estate, keeping the right to use every September Deductible as gift of remainder interest in home Deductible as an undivided share of all the interests owned by the donor I give charity the right to own my vacation home after I die by a remainder deed Rev. Rul. 75-420; 1975-2 C.B. 78
  38. 38. All of donor’s interests Undivided share of donor’s interests 11/12 ownership in my rights My Ownership Rights My Gift Rights to walnuts from specific tree branches I own only a life estate (right to use for life). I give 11/12 of it to charity.
  39. 39. If all interests are given to charity, each divided portion is deductible To: The Salvation Army To: The Red Cross To: Texas Tech University
  40. 40. Summary If you don’t give or share all of your rights, you get no deduction (unless it is a designated exception)
  41. 41. Help me HERE convince my bosses that continuing to build and post these slide sets is not a waste of time. If you work for a nonprofit or advise donors and you reviewed these slides, please let me know by clicking
  42. 42. If you clicked on the link to let me know you reviewed these slides… Thank You!
  43. 43. This slide set is from the curriculum for the Graduate Certificate in Charitable Financial Planning at Texas Tech University, home to the nation’s largest graduate program in personal financial planning. To find out more about the online Graduate Certificate in Charitable Financial Planning go to www.EncourageGenerosity.com To find out more about the M.S. or Ph.D. in personal financial planning at Texas Tech University, go to www.depts.ttu.edu/pfp/ Graduate Studies in Charitable Financial Planning at Texas Tech University

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