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Make the Most of Your Money With a Year-end Gift

By Tom Watson on December 6, 2006No Comment


Make the Most of Your Money With a Year-end Gift
By: Hudson Akin, 12/7/06

As we approach the end of 2006, philanthropic support of your favorite charity is an easy way to make a big difference and have the benefit of tax savings. Following are helpful tips that can help make the biggest bang with your buck:

* Review Your Portfolio.  With the stock market at a new high, it may be wise to contribute appreciated securities that you have held more than one year, which may allow you to claim a charitable deduction at fair market value and avoid tax on the gain.  Conversely, you may retain deductions for capital losses on your tax return by first selling your securities that have depreciated; then contributing the cash proceeds to charity. (If you donate those securities directly, you will not be entitled to take the capital loss.)

* Write a Check to the Charity. Cash is always appreciated! Make sure your gift is postmarked by December 31 for proper credit.

* Charge Your Credit Card before year-end as the charge date qualifies as the date of the gift.

* Prepay a Pledge, either the entire amount or an upcoming installment. For many taxpayers it makes sense to “bundle” contributions into a single year.  Ask your tax advisor whether this strategy may benefit you.

* Consider a Life-Income Gift. Charities offer a variety of life-income plans to fit your needs. You can make a gift now, obtain tax benefits and receive income for the rest of your life.  Ask your charity of choice to provide you with personal illustrations to assist you and your advisors in exploring these options.

* Do Your Giving Early. This is especially true if you want to make a gift of non-cash assets (stocks, mutual funds, real estate, etc.) or life-income gifts (gift annuities, trusts, etc.) by December 31.  Please note that, depending on how (and in what form) gifts are made, various rules apply for determining the gift date. It is best to contact the charity well in advance to ensure a smooth transaction.

* Talk With Your Advisor. Before making a significant gift to a charity, you should have your CPA, attorney or financial advisor help you understand the impact of your gift on your estate plan or income tax return. Address financial and personal goals with regard to your charitable giving interests; what you want to give, the timing of your gift, and how a gift will be made. By asking these questions, you can determine what best meets your needs while benefiting a good cause.

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