For certain types of assets, community foundations, like the Jewish Community Foundation, offer a reasonable solution to donors who’ve either amassed their wealth in real property or have started or own a business that is registered as a C-Corp in the State of California.
For donations of either whole or fractional interests in real estate the rule is that the tax deduction is limited to a tax-adjusted basis. This means if a donor has an interest in real property that they would like to gift to their own family foundation and the property has been fully depreciated, the donor would receive a ZERO tax deduction. Had that same interest been contributed to a public charity, like the Jewish Community Foundation, the donor would have received a tax deduction for the fair market value of the property.
Had that same interest been contributed to a public charity, like the Jewish Community Foundation, the donor would have received a tax deduction for the fair market value of the property.
We prefer ample (1-2 months) notice when receiving this kind of donation, so please contact us when you are considering this option.
It’s a common example in the transactional community that Joe started his business in his garage for $350 over 25 years ago and it is now worth $50 million.
Joe faces an interesting opportunity: If he sells his company outright he’ll receive the $50 million and – unless he has done some other planning – will have to pay a total of 38% in capital gains taxes.
There are many ways for Joe – if he was involved in preplanning before the sale with his tax and/or trust and estates lawyer – to plan strategies to offset much of the proceeds.
Contact us for more details at 323-761-8704 or by email.
Baruch Littman is Vice President of Development at The Foundation. Baruch has more than 30 years of development and marketing experience.