Gifts of tangible personal property include, for example, artwork, antiques, boats, cars, jewelry, airplanes and collections of various types.
Before discussing a gift of personal property with Clarkson, a donor should consider several points:
- Is this item or collection something that Clarkson will use, or should Clarkson sell it and use the proceeds?
- What is a realistic value of the property?
- Is there a ready market if the property is to be sold?
- Is the property difficult to move, fragile, perishable or not appropriate to Clarkson’s mission?
- Am I prepared to pay for an appraisal to claim an income tax charitable deduction?
- Am I able to give a little time to complete this gift?
Outright Gift: As an outright gift, Clarkson may use the property for its charitable mission or the University may sell the property and use the net proceeds from the sale for whatever purpose you designate when you make your gift.
Bargain Sale: In a bargain sale agreement, a donor sells property to Clarkson at a portion of its market value. The difference between the sale price to Clarkson and the appraised value is a gift from the donor. Clarkson may then use the property or sell it and use the net proceeds for whatever purpose agreed to with the donor.
Charitable Remainder Trust: Certain personal property may be used to fund a charitable remainder trust. The trust sells the property and the net proceeds are reinvested to provide income to the donor(s) and/or other beneficiaries for life and/or a term of up to 20 years. Income payments would vary year to year, depending on the annual revaluation of trust assets. When the trust ends, the remainder passes to Clarkson.
Retained Life Estate: Certain pieces of property, such as a collection of artwork or historic texts, may be useful to the University’s academic mission. A retained life estate, giving the University ownership and possession of the property for a certain period of time each year (and then ultimate ownership at some point in the future), may be a useful way for a donor to retain some enjoyment of the property, generate an immediate income tax charitable deduction and allow the University to use the property and plan for its eventual home at Clarkson.
Estate Gift: A donor may create a bequest provision, called a devise, in a will or living trust describing specific property. The gift may come to Clarkson unrestricted or you may wish to restrict it to a certain purpose. It may also be possible to pass the property to a testamentary charitable remainder trust to provide income to heirs before the remainder someday passes to Clarkson.
Gifts of tangible personal property may count at full appraised value in Clarkson fundraising campaigns, in your next anniversary reunion, and towards Roundtable annual recognition. Contact the Annie Clarkson Society for help related to your unique circumstances.
Tax and Financial Implications
An important qualifier for an outright gift of personal property is whether the gift is related or unrelated to Clarkson’s charitable mission. If your gift can be used by Clarkson for a least three years for purposes connected to its mission, then your gift is related. Your gift is unrelated to Clarkson’s mission if the University will sell the property immediately or within three years of the gift date.
If you have owned the property for at least one year, a gift for related use may be eligible for an income tax charitable deduction for the full appraised value. An unrelated gift may be eligible for a charitable deduction at the cost basis. If the property is your creation, you may be limited to a cost basis (cost of materials) deduction under any circumstances.
If you itemize, a gift of property may generate an income tax charitable deduction up to 30% of your adjusted gross income. Any excess deduction may be carried forward for up to five additional years. To claim an income tax charitable deduction for any gift of property, the donor must acquire and file an independent appraisal from a qualified, independent appraiser.
For an outright gift, the donor may not need to declare any capital gain on the property and may be eligible for an income tax deduction at the full appraised value.
In a bargain sale, the donor may be eligible to declare the difference between the sale price to Clarkson and the appraised value as a charitable gift. Any capital gain on the property may be apportioned between the sale price and the appraisal value, so the donor may need to declare capital gain attributed to the sale price.
Personal property gifts to retained life estates and charitable remainder trusts may be eligible for an income tax deduction for a portion of the appraised value of the property. The circumstances at the time the gift is made determine the value of the deduction. In most cases, the donor will not need to declare any capital gain when making the gift.
You can contact the Annie Clarkson Society for more information.
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This web page does not provide legal or financial advice, nor is it a comprehensive review of the topic. You should consult your legal and financial advisers and Clarkson University before making or planning your gift.