Charitable gift tax planning used to focus on avoiding or reducing estate taxes. Today's planning is about making gifts without increasing taxable income. Your tax-deductible contributions of cash and other assets may help you manage how much income tax you pay. Contact us to learn how you may be able to give a larger gift that will have even greater impact and lower your taxes.

You can make a gift of publicly-traded stock and reduce or eliminate your capital gains tax. Over time, publicly traded stock may increase in value, or appreciate. The appreciation in stock that is held for more than 12 months is taxable as capital gain. If transferred directly to MU Extension without selling, the full value of the stock gift is deductible as a charitable contribution. For example, if 20 shares of xyz corporation was bought a number of years ago for $10 per share, and it is now worth $50 per share, the capital gain would be $40 per share. If the 20 shares were sold, $800 would be taxable at the capital gains rate. Instead, if the 20 shares were given to MU Extension, the donor would make a gift of $1,000 and receive a charitable deduction for the full amount of the gift. Always consult your tax advisor before making a charitable contribution of appreciated assets.

If you are 70½ or older, your Individual Retriement Account is a great way to give without triggering taxable income. You can make qualified distributions directly to MU Extension up to $100,000 each year. These will not count as taxable income and can count as Required Minimum Distributions that some IRA owners must pay. You may make MU Extension a beneficiary of all or part of your retirement account. Contact the Advancement office to learn how to designate a gift for MU Extension.

Charitable gifts of grain commodities can be donated at any time but work best when donated in the year following the year they are grown. Under this method, the expenses of the crop are deductible in the year in which the crop is grown. This give the crop a $0 cost-basis in the following year. By donating the crop directly to the charity, no income tax or self-employment taxes are payable. In addition, there is no charitable deduction.

A gift made in this manner should result in tax savings of at least $300 per $1,000 gift in federal and state taxes for those in the 15 percent tax bracket and nearly $400 for those in the 25 percent bracket, as compared to savings of $150 to $250 had the crop been sold for cash and then a check written for the $1,000 gift.

Always consult your tax advisor before assuming a specific tax advantage is applicable.

A donation of real estate may allow you to: receive a charitable tax deduction, reduce or eliminate capital gains tax, eliminate gift tax on transfer, reduce size of your taxable estate, convert non-income asset into income-producing asset, and relieve responsibilities and costs of upkeep.

Example: In the early 1980's, the donor purchased five acres of agricultural real estate on the edge of town for $150,000. He kept the property maintained and taxes current, but never made any major improvements to turn it into an income-producing property. Nearing retirement, the donor considered how he might use the property to supplement his retirement income. With the help of an advisor, he gave the property to a university through a trust arrangement that allowed the property to be sold and create an annual trust income for the donor for the rest of his and his wife's lives. A portion of the value of the trust was considered a gift allowing the donor to use a sizeable charitable deduction for that year's taxes. In addition, since the donor retains an income benefit from the trust created from the sale of the real estate, the capital gains are spread over the life of the trust making the payment of the capital gains taxes manageable. Each year, the donor receives a payment of five percent of the value of the $1.2 million dollar trust created from a non-income producing piece of real estate.