Giving Spotlight: Tax Mitigation

When you completed your taxes this past April, you may have been shocked to see that this year your tax rates were higher. 

For 2013, you may also expect an additional increase in taxes.  on January 2, 2013, Congress passed the American Taxpayer Relief Act of 2012 (ATRA)  Of the number of reforms included in the ATRA was the creation of a higher tax bracked of 39.6% and an increase of capital gains rates to 20% for some individuals.

Consequently, as you consider supporting charity.  Consider leveraging your passion for charity to help you mitigate your tax situation.

Giving Appreciated Stock (instead of cash)

As charity is tax exempt, 100% of your stock gift will be able to benefit your charitable organization.  Furthermore, you could avoid the tax on all of the stock gains and 100% of the stock value will provide you with a charitable income tax deduction.

Gifts of Real Estate

Like stock, once you sell your real estate, you will be subject to capital gains tax on the increase in the property’s value.  It is possible to “cash out” of the property, mitigate or eliminate your tax and support charity through a gift and sale.  In this scenario, you could gift a portion of the real estate to the University and retain a portion in your name.  You and the University would jointly list and sell the property and the proceeds would be divided based on the ownership interests.  As the portion you retain would still be subject to capital gains tax, you could use the charitable tax deduction that you receive from your gift of the percentage of the property, to mitigate (if not eliminate) this tax.

Charitable “Pensions”

The University also offers a number of charitable vehicles that will provide you with an income tax deduction and an income stream in exchange for an irrevocable gift.  These gift vehicles (ranging from the simple charitable gift annuity to the charitable remainder trust) are great tools to help you save more for your retirement while at the same time support the University.

In addition to the above, there are a number of great vehicles that will help you to leverage your passion for the University to help your tax situation.  To learn more, contact Doug Colby, Senior Director of Development, at or (949) 824-0383.

As always, you should consult with a tax and legal advisor before implementing any of these techniques.