Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Thursday, June 12, 2014

Gifting Appreciated Property

Appreciated propertyIndividuals considering gifting appreciated property to charity should be aware that not all property donations are treated equally for income tax purposes.  Depending on the class of property, prior use, as well as the donor’s holding period and type of donee, the charitable contribution deduction could be based on fair market value, the donor’s tax basis, or disallowed entirely. 

Although there are some exceptions, an individual’s deduction for a charitable gift of property held as a capital asset for more than one year is based on the property’s fair market value.  Contrastingly, the deduction is limited to the lesser of fair market value and the donor’s tax basis if the donor’s holding period is one year or less, the property is ordinary income property, or the donee is a private foundation other than an operating or distributing foundation.  Deductions are subject to income limitation thresholds, with a five-year carryover period for the unused portion. 

The donor must receive written acknowledgement from the donee for any gift of $250 or more by the earlier of the donor’s filing deadline and the date the donor’s tax return is filed.  Non-cash charitable contributions of more than $500 must be reported on IRS Form 8283, which is filed with the donor’s tax return.

See Dahlia Doumar and Carl Merino, What Donors Need to Know About Appreciated Property, Mondaq, June 10, 2014.  

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Estate Planning - Generally, Gift Tax, Income Tax | Permalink

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