Annuitant
-An annuitant is a person who is the income beneficiary of a gift annuity, deferred gift annuity, flexible gift annuity, or commuted payment gift annuity.
American Council on Gift Annuities
-The American Council on Gift Annuities (ACGA) is a national organization of charities that promotes charitable gift annuities. Among its many functions, it is a clearinghouse for information on gift annuities, sponsors the Conference on Gift Annuities every three years, and issues tables of suggested maximum annuity rates that member charities should offer to their donors.
Actuarial Age
-A person's actuarial age for computing a charitable deduction and choosing an ACGA suggested gift annuity rate is his or her age on the birthday that is closest to the date of gift.
Choosing a Discount Rate When Making Gift Annuity Calculations
-Conventional wisdom says that it is always best to use the highest available discount rate when calculating a life income gift deduction since this maximizes the donor's deduction. Using the highest discount rate also minimizes the tax-free portion of a gift annuity's payments.
Taxation of Gift Annuities and Deferred Gift Annuities
-A portion of each annuity payment is excluded from income as a return of principal; the rest of the annuity payment is taxed as ordinary income.(1) If your projection runs beyond the life expectancy of the annuitant(s), previously tax-free income is taxed as ordinary income. If the donor qualifies to report the gain that results from the establishment of the annuity over the donor's lifetime, part of the excludable portion will be taxed as capital gain until all of the gain has been reported.(2) Capital gains tax is assessed at the lesser of the rate you enter for the bene
Bequest
-A bequest is an irrevocable transfer by will of securities, real estate, tangible personal property, or other assets from the deceased to an individual or charity. Donors typically make outright bequests to charity, but they can also make them in the form of a planned gift. For bequests to charity, the donor's estate earns an estate tax deduction equal to the value of the gift to the charity.
Calculation of Deduction - Bargain Sales
-A bargain sale of property is treated as part gift and part sale. The charitable deduction for the gift portion equals the total value of the property, less the total amount of consideration paid by the charity, including any debt to which the property is subject.(1) If you specify that the bargain sale is subject to the reduction rules for ordinary income and short term capital gain property, the charitable deduction is calculated by reference to the cost basis allocated to the gift portion of the bargain sale.(2)
Bargain Sale
-A bargain sale is a simple agreement in which the donor sells securities, real estate, tangible personal property, or other assets to a charity for less than their current value. The donor earns an income tax deduction for the difference between the fair market value of the donated assets and the sale price, subject to IRS 30%/50% limitations. If the donor bargain sells long-term appreciated property, the donor must report the capital gain that is attributable to the sale portion of the transaction.
Installment Bargain Sale
-A bargain sale is a simple agreement in which the donor sells securities, real estate, tangible personal property, or other assets to a charity for less than their current value. The charity pays the donor the sale price in installments according to a schedule the donor and charity agree on. The donor earns an income tax deduction for the difference between the fair market value of the donated assets and the present value of the installment payments, subject to IRS 30%/50% limitations.
What to Do When a Proposed Deferred Gift Annuity Doesn’t Qualify
-We've been getting a lot of client calls asking us what to do when a deferred gift annuity they want to propose to a donor doesn't pass the 10% remainder value test. Before we answer this question, let's first explore why recently this issue has been arising with greater frequency than we're used to.