(3) Upon receipt of the gift, the trustee will often sell the
appreciated property and reinvest the proceeds in order to better provide the cash flow required to make the payments to the grantor.
Though it appears, despite the deviation from Haig-Simons principles, that there is broad satisfaction with the basic background rules regarding the income-tax treatment of gifts, certain ancillary rules regarding gifts of
appreciated property are among the most unsatisfactory in our income tax.
In the tax area, IREM will work with National Association of Realtors (NAR) to retain current capital gains rules as they apply to
appreciated property, like-kind exchanges and carried interest, in particular by keeping capital gains tax rates at the existing 15 percent while suspending passive loss rules.
Basis adjustment required for S corporation shareholders for corporate donations of
appreciated property. Pursuant to the S corporation rules made by the Pension Protection Act, for 2006 and 2007, the amount of the shareholder's basis reduction in the stock of an S corporation will be equal to his or her pro rata share of the adjusted basis of the contributed property.
Or you can give
appreciated property to the Foundation without being taxed on the appreciation.
You can sell
appreciated property with no capital gains tax.
The donor transfers cash or
appreciated property to the charity, and in return the charity makes an unsecured promise to pay an annuity to the donor or another designated annuitant.
If you give
appreciated property to charity, in many cases you will get to deduct the full market value.
Third, donations must be made in cash or by check, so contributions of
appreciated property aren't eligible.
Clients will generally receive a higher tax deduction when they use long-term
appreciated property (held more than one year) to fund contributions and avoid capital gains tax.
Given this proclivity, the change in rate also eliminates the incentive to donate
appreciated property. Historically, there has been a tax incentive to transfer
appreciated property for philanthropic purposes.
A common occurrence among partnerships that own
appreciated property is refinancing the property, then distributing the proceeds to the partners.