Gifts of tangible personal property present the collector and creator with opportunities to use their collections, large and small, for personal and charitable purposes during their lifetimes and as a part of their overall estate planning.
Tangible personal property is broadly defined in the tax code as any property, other than land or buildings, that can be seen or touched. Examples include artwork, jewelry and gems, collectibles, boats cars, tractors and aircraft, timber, or business inventory and equipment.
Gifts of tangible personal property during lifetime or at death present complex tax, valuation, and authentication issues. It is important to involve your professional advisors, independent tangible personal property advisors and the Nebraska Community Foundation to ensure the greatest gifting opportunities.
The following frequently asked questions and answers will provide you with some background on these issues.
Q: Is the tangible personal property held as inventory by a dealer or as an asset in a collection by an investor?
A: Assets used in a trade or business are taxed as ordinary income and are deductible when gifted at cost basis. Assets held in a collection for more than one year are taxed as long-term gain property. When gifted, the tangible personal property is deductible at full fair market value and bypasses capital gain taxes.
Q: What will the charity do with the tangible personal property?
A: If the tangible personal property is used in a manner related to the charity’s exempt purpose, for example, a gift of artwork to an art museum, the deductible amount is the full fair market value of the tangible personal property up to 30% of the donor’s adjusted gross income in the year of the gift, with a five-year carryover for any excess contribution. If the tangible personal property is not the type of property ordinarily used by the charity, the value of the deduction is limited to the donor’s cost basis in the tangible personal property. Since the deduction is limited to 50% of the donor’s adjusted gross income in the year of the gift with a five-year carryover for any excess contribution.
Q: How is the value of the tangible personal property substantiated for tax purposes?
A: If the full fair market value is over $5,000 an appraisal by an independent appraiser will be required to substantiate the value of the tangible personal property.
You can visit Nebraska Community Foundation’s Gift Planning website – www.ncfgift.org – to begin the process of donating to the Wayne Area Legacy Fund. You can also find details on the benefits and process of making a charitable gift for other out-of-the-box giving methods beyond cash.
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Nebraska Community Foundation unleashes abundant local assets, inspires charitable giving and connects ambitious people to build stronger communities and a Greater Nebraska.
Headquartered in Lincoln, the Foundation serves communities, donors and organizations by providing financial management, strategic development, education and training to a statewide network of 1,500 volunteers serving over 270 communities.
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Wayne Area Legacy Foundation harnesses the power of giving to make the Wayne Area a great place for all ages to live, work and play for generations to come.
We invite you to be a part of the legacy of promoting progress in our area by giving to the unrestricted endowment. Similar to a community savings account, unrestricted endowments are an important tool to keep hometowns across Nebraska growing, thriving and improving future generations. A portion of the income earned by the endowment is granted annually to fund projects and programs to benefit the community, the principal remains intact and grows every year.
The Wayne Area Legacy Fund (WALF) has invested over $70,000 back into the Wayne Area community since the inception of the fund. The WALF is an affiliated fund of the Nebraska Community Foundation (NCF), a 501(c)(3) charitable organization. All contributions to WALF are tax-deductible. Visit WayneAreaLegacyFund.org for additional information. Contact us at WayneAreaLegacyFund@gmail.com. Be sure to like us on Facebook @WayneAreaLegacyFund.
