Donating Property

Ten Forty + Quality Tax Preparation & Financial Services 5625 Cypress Creek Parkway, Ste 321, Houston TX 77069 281-397-7777 Fax 281-397-7443 Tax Tips Donating property? 5 questions to ask yourself As the holidays approach, you may decide to be extra generous this year by donating property to charity. As long as you observe the strict tax rules in this area, you may still be able to take advantage of tax benefits for 2017. The following questions will help you determine the value of your tax break. Has your donation increased in value? Normally, your deduction for charitable gifts of property is limited to the property's initial cost. However, if the property would have produced a long-term capital gain had you sold it instead of donating (aka you've owned it longer than one year) you may deduct its full fair market value (FMV). For example, say you bought a painting for $10,000 five years ago that's now worth $15,000. If you donate it to charity, you can deduct the FMV of $15,000. The $5,000 of appreciation remains untaxed… forever. Has your donation decreased in value? If property has declined in value since you acquired it, your deduction is limited to its FMV regardless of how long you have held it. Have you gotten a charitable appraisal? Whether or not property has increased or decreased in value, obtain an independent appraisal of its FMV. The IRS specifically requires independent appraisals for property donations exceeding $5,000. (The appraisal costs themselves may be deductible.) Does your donation have a charitable function? If you donate property that isn't used to further the charity's tax-exempt function, your deduction is generally limited to the property's basis. This could occur, for example, if you donate a family heirloom to a museum, but the artwork is never displayed. What is your adjusted gross income (AGI) limit? Among other limits, your deduction for charitable gifts of appreciated property in 2017 can't exceed 30 percent of your AGI. Usually, you'll be able to squeeze under the 30 percent threshold. Any excess is carried forward for up to five years. Other factors may come into play, such as special rules for donations of vehicles. Bottom line: follow the tax rules on year-end contributions and you'll be happy you did. Give us a call if you have questions about your charitable donations. 2016 Tax Extension Deadlines are approaching. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker EA www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000.