IN-KIND GIFTS
How Have Some New Laws Affected Charitable Giving?
Edited by Arli Epton
Reprinted with Permission from R&R Newkirk Company, www.rrnewkirk.com

The top gift and estate tax rate has dropped to 46% for 2006 transfers. The annual gift tax exclusion increased from $11,000 per donee to $12,000 ($24,000 when married couples split gifts). The estate tax credit increased from a $1.5 million “shelter” to $2 million per person ($4 million for married couples, with proper planning) for 2006-2008.

Gifts are fully deductible in 2006, even when donors receive thank-you items from charities, so long as those items have a value of $86 or 2% of the amount contributed, whichever is less. So for example, when a donor contributes at least $43, the charity can give back—without affecting the donor’s deduction—low-cost items, such as T-shirts or bookmarks bearing the charity’s name or logo, so long as the cost to the charity does not exceed $8.60.

The IRS released a new form in December 2005 for “Donated Property of $5,000 or Less and Certain Publicly Traded Securities.” This form, commonly referred to as a “Form 8283,” now has special instructions in Section A, Part I (b) for information on donated vehicles. Part II of Section A is now called “Partial Interests and Restricted Use Property.” Section B is no longer called “Appraisal Summary” and is now entitled “Donated Property over $5,000 (Except Certain Publicly Traded Securities).” There are new check-off boxes for art over $20,000 in value and art under $20,000; collectibles, qualified conservation contributions, other real estate, intellectual property, equipment, securities, and “other.” The form has a long definition of “Art,” including paintings, sculpture, watercolors, prints, drawings, ceramics, antiques, decorative arts, textiles, carpets, silver, rare manuscripts, historical memorabilia, and similar objects. “Collectibles” include coins, stamps, books, gems, jewelry, sports memorabilia, dolls, etc., but not “art.”(Sorry, no mention of beer can collections!) The form states that if the total art collection is $20,000 or more, the donor must attach a complete copy of the signed appraisal, and if the deduction for any property exceeds $500,000, then the donor must attach a complete copy of the signed appraisal.

The IRS issued a warning on vehicle deductions. The deduction allowed for a vehicle contribution to charity has been limited to the gross proceeds from the charity’s sale of the car since January 1, 2005. An exception allows donors to claim a higher deduction, equal to fair market value, if the charity sells the vehicle at a price significantly below fair market value to a needy individual in furtherance of a charitable purpose or to relieve the poor and distressed who are in need of a means of transportation. The IRS has warned nonprofits that it will not accept such an acknowledgment from a charity when the vehicle has been sold at auction.