Gifts of Cash and Other Assets

Gifts of Cash

A cash gift is the easiest way to give and is as simple as writing a check to the "CFCC Foundation". Cash gifts may be deducted on your federal income tax return up to 50% of your adjusted gross income (AGI). If, during any given year, your total charitable contributions exceed this limitation, you may carry over the remaining deduction for up to five succeeding tax years. With the assistance of your financial planners (attorney, CPA) and our staff, we can plan your gift to maximize your tax deduction and lower the "cost" of giving by creating tax significant savings.

Gifts of Stocks/Securities

One of the best methods to do charitable giving is to gift highly-appreciated securities . This gift creates a charitable income tax deduction for the fair market value of your shares and enables you to avoid paying tax on the paper gain. In effect, you save on taxes twice! With a gift of securities, your charitable deduction is limited to 30% of your adjusted gross income (AGI). Any unused portion of the deduction can be carried forward, subject to the same 30% of AGI limitation, for up to five additional years.

Another important advantage of using appreciated securities is that if you wish to make a substantial gift to the college, you can also retain an income stream from your assets to support yourself during your retirement. You can do this by establishing a trust or gift-annuity with a gift of appreciated securities. You may then be able to convert a highly-appreciated, but low- or non-income producing asset to one yielding higher income.

Making a gift of appreciated securities may enable you to use the cash you saved to purchase the same number of shares of the same stock. You will then have an increased basis, which may lower your capital gain tax if and when you sell the securities.

To take advantage of the tax deduction, you would need to transfer your securities to the CFCC Foundation. If you sell them then you will have to pay the capital gains tax, if we sell them you will not have any capital gains tax to save. If you have securities that have depreciated in value, you should sell this type of security and then when you contribute the proceeds to the Foundation you can take then take a capital loss on the sale of this asset.

Gifts of Cash of Closely Held Stock

If you own a business or have privately-held stock, you may give this type of stock to the CFCC Foundation and receive a federal income tax charitable deduction for the full fair market value of the shares.

For example, say you own 60% of your company, ABC Industries. You decide to give the CFCC Foundation some of your stock, worth $25,000. (A qualified appraisal of closely-held stock is required by the IRS to support your claim of a charitable deduction for any value in excess of $10,000). Once you make your gift, you receive a personal income tax deduction for the fair market value of the stock (as determined by the appraisal) and you avoid a capital gain tax on the appreciation.

At a future date, the CFCC Foundation decides to accept ABC Industries' offer to buy the shares back. The company gives the CFCC Foundation $25,000 in exchange for the stock. In this example, you received a $25,000 deduction and the CFCC Foundation has received $25,000 in cash from ABC Industries; and, you have removed a significant asset from your taxable estate. The IRS allows this arrangement ONLY if the CFCC Foundation was not required by any prior agreement with the donor or the company to redeem the stock.

A similar arrangement can be made if a gift is made of soon-to-be-liquidated stock. If you make a timely gift of the stock prior to your company adopting a plan of liquidation, you can avoid tax on the capital gain when the shares given to the CFCC Foundation are redeemed.

Gifts of Tangible Assets

Gifts of tangible assets may include a wide range of items, including but not limited to, computers, automobiles, artwork, sculpture, books, construction equipment, electrical equipment, musical instruments, science and medical equipment, videos, cassettes and other items that may help serve the college.

Tangible gifts that benefit the college's health occupation programs may be eligible for state match funds that are added to the Health Occupations Endowed Scholarship Fund.

We invite you to contact the Foundation in advance to discuss your possible gift, including its condition, possible use, and other special concerns that may be important to you. A decision will be made quickly as to whether the gift can be used by the college and will be accepted. Once possession is taken, the college reserves the right to use the gift in any way that benefits the college, unless a prior agreement has been made with you. We will officially acknowledge the current market value if we have a professional appraisal and the value is over $500. If you do not require a specific market value, then we will give you a general acknowledgment and you may list your own value.

Gifts of Real Estate

Gifts of real property, such as gifts of vacant land, personal residences, vacation properties, rental property, can offer numerous tax and other benefits very similar to those for gifts of appreciated securities. You can make this gift by a deed transfer to the CFCC Foundation during your lifetime, or through your will.

Your real estate gift may be made outright, or through an income-producing gift arrangement. While most people give their entire interest away, you may give only a portion of the property (an undivided percentage interest) while retaining the rest for other purposes. You may deduct the value of the gift up to 30% of your adjusted gross income, with an additional five-year carry forward period.

Your tax deduction is based on the current market value of the property at the time you make your gift as determined by appraisal (within six months of gift). If your property has appreciated in value, you may avoid tax on the capital gain, reduce your taxable estate by the value of the gift, and receive a charitable contribution deduction for the full fair market value. In order to avoid capital gain tax, it would be necessary to gift your property to the CFCC Foundation prior to any binding agreement to sell. The Foundation may sell to an interested party immediately after the gift is made. Property sold within two years from the date of the gift requires reporting to the IRS with no tax consequence if the sale is at or above the appraisal value.

Gifts of Life Residence

You may gift your personal residence or vacation home to the CFCC Foundation and obtain an immediate income tax deduction while still retaining the right to live in and use the property during your life. By deeding the property to the CFCC Foundation, you retain the right to use it for life, in essence, to use it and care for it the same way you would if you continued to own the property. You may wish to stipulate that your spouse may live there for his/her lifetime or that you continue to live on the property for a given number of years. You will receive an immediate income tax deduction for the contribution equal to the value of the remainder interest given to the CFCC Foundation.

Gifts of Life Insurance

By transferring actual ownership of an existing insurance policy to the CFCC Foundation, or by purchasing a new policy, you will be able to receive an income tax charitable deduction.

Life insurance enables you to leverage in the future your actual cash gift today. Life insurance can combine with other gifts to replace dollars for your heirs that you decide to give to the CFCC Foundation. For example, by combining a charitable remainder trust and an irrevocable insurance trust, you can make a charitable gift to the CFCC Foundation and replace the assets with life insurance for the benefit of your heir. To accomplish this, you would simply use all or part of your trust or annuity income, and any tax savings that resulted from the gift, to buy an insurance policy for an amount equal to the charitable gift. By naming a spouse or child as the beneficiary, you can pass an asset of equal worth to your heirs while still accomplishing your philanthropic objectives.

Gifts of IRAs and Pension Plans

Your retirement plan probably accounts for significant assets in your estate. At the same time, your pension plan assets could be subject to taxes to over 70% when the proceeds go to family members,with your heirs receiving only a fraction of the value of your retirement plan after the payment of the taxes. This is caused by the imposition of both the estate tax and a tax on income in respect of a decedent, commonly referred to as IRD. IRD is income that was earned by the plan participant but was not taxed to that individual before death. As a result, any of your heirs receiving distributions from your retirement plan assets after your death, must pay an income tax on the proceeds. If your assets are left to one of you children, for example, your children would be required to pay personal income tax on the funds they receive and the amount of their inheritance could be reduced by more than 45% (combined individual state and federal rates).

Making the CFCC Foundation a beneficiary of your individual retirement account, pension 401(k), or other retirement savings plan may save your and your heirs significant income and estate tax dollars. This type of asset is so heavily taxed, that you may find it advantageous to make a gift of your retirement plan assets while reserving for heirs other assets that are not as heavily taxed. You also can arrange for lifetime income to be paid from retirement funds to a family member after your death, with a gift to the CFCC Foundation at a later date.

To make the CFCC Foundation a beneficiary of a part, or all, of any of the above mentioned options, is easy to accomplish. We will be pleased to provide you with the appropriate language to use, and your employer, attorney or other financial advisor can assist you in making the necessary changes in your beneficiary designation.

As with all financial planning, we recommend you consult with your attorney, CPA, or financial advisor. We are most willing to work with these professionals in arranging your gifts to best meet your philosophical and financial goals. If you need professional services, we would be pleased to recommend several persons in our area from whom you may choose to consult.

For further questions or comments, please contact:

Dr. Casius "Cash" H. Pealer
President, CFCC Foundation
Phone: (352) 873-5808
Fax: (352) 291-GIVE
E-mail: cfccfd@cf.edu

A document of this type is not designed to cover all the legal and tax ramifications of a potential gift. Certainly, personal circumstances and state laws vary and for this reason specific information should be sought from your attorney or tax advisor.

All gifts and bequests should be made payable to: CFCC Foundation, Inc.