Charitable Gift Types

Publication 1459 is a book of federal tables used to compute retained life estate deductions. The edition that contains tables based on Table2000CM. It is available on the Web. The edition that contains tables based on Table 90CM is called Actuarial Values, Book Gimel. The edition that contains tables based on Table 80CNSMT is called Actuarial Values, Book Alpha.

Publication 1458 is a book of federal tables used to compute charitable remainder unitrust deductions. The edition that contains tables based on Table2000CM is called Actuarial Values, Book 3B. It is available on the Web. The edition that contains tables based on Table 90CM is called Actuarial Values, Book Beta. The edition that contains tables based on Table 80CNSMT is called Actuarial Values, Book Alpha.

Publication 1457 is a book of federal tables used to compute charitable remainder annuity trust and gift annuity deductions and pooled income fund deductions. The edition that contains tables based on Table2000CM is called Actuarial Values, Book 3A. It is available on the Web. The edition that contains tables based on Table 90CM is called Actuarial Values, Book Aleph. The edition that contains tables based on Table 80CNSMT is called Actuarial Values, Book Alpha.

The deduction computation for a gift to a pooled income fund depends on the fund's valuation rate.  This valuation rate, in turn, is determined by the fund's historic yearly rate of return once the fund is three or more taxable years old.  The valuation rate for a gift equals the highest of the fund's yearly rates of return in each of the three calendar years prior to the gift.

The valuation rate for a fund that is less than three taxable years old is mandated by the IRS and is based on the average of the monthly IRS discount rate over the past three calendar years.

A pooled income fund ("fund") is a gift plan defined by federal tax law that allows a donor to provide income to herself or others for life while making a generous gift to charity.

The non-grantor lead trust is the most common form of charitable lead trust. During the trust term, typically a fixed number of years, the trust makes payments to one or more charities. When the trust terminates, it distributes its remaining principal to individuals named by the donor, typically family members. A non-grantor lead trust is treated as an independent taxable entity that is responsible for all of its own taxes and accounting. It pays tax on income, including realized capital gain income, that is in excess of its charitable payments.

The Massachusetts 2-G is a Massachusetts state tax form for reporting income, deductions, credits, etc. of a grantor-type trust.  Massachusetts charities report pooled fund income to their Massachusetts participants on this form.

In the context of planned giving, "depreciable portion" is relevant to retained life estatesRetained_Life_Estate only. The depreciable portion is the value of the buildings and should be listed separately in a qualified appraisal of the real estate. In most cases, the only building in a retained life estate is a house.

You must know the depreciable portion to compute the deduction for a retained life estate.

In contrast, the undepreciable portion is the value of the land that comes with the buildings in a retained life estate.

A deferred gift annuity is a simple contract between the donor and the charity. In exchange for an irrevocable gift of cash, securities, or other assets, the charity agrees to pay one or two annuitants a fixed sum each year for life, with payments starting at least one year after the gift. The annuitants typically are the donor or the donor and the donor's spouse. The older the annuitants are at the time of gift and the longer payments are deferred, the greater the fixed income the charity can agree to pay. The donor receives an income tax deduction for the difference between the amount transferred and the value of the annuity, subject to IRS 30%/50% limitations. The donor's deduction must be at least 10% of the funding amount.

Sometimes called a “Tuition Assistance Plan,” a commuted payment gift annuity is a simple contract between the donor and the charity. The commuted payment gift annuity is really a modified deferred gift annuity. In exchange for an irrevocable gift of cash, securities, or other assets, the charity agrees to pay one or two annuitants a fixed sum each year for life, with payments starting at least one year after the gift. The contract includes language, however, that gives the annuitant the option to commute the lifetime of payments to a fixed number of payments of equivalent value. The annuitant may commute the payments immediately or at any time prior to the date of first payment.