Charitable Gift Types

The remainder factor is the fraction of the funding amount of a planned gift that is considered a charitable contribution, expressed as a decimal. The remainder factor multiplied by the funding amount equals the value of the charitable contribution.

For example, if the remainder factor for a charitable remainder unitrust is .24561 and the unitrust is funded with $100,000, the value of the charitable contribution is .24561 x $100,000 or $24,561.

Reasonably commensurate value (RCV) is a measure of the present value of a gift annuity's payments at the time the gift annuity is funded.  As of this writing, North Dakota, Oregon, Tennessee, and Washington are the only states that require a gift annuity's RCV to appear in the annuity agreement. California also used to impose this requirement, but legislation passed in August 2005 that removed this requirement, effective 1/1/2006. 

North Dakota, Oregon, Tennessee, and Washington all accept the Investment in Contract amount as the RCV.

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.