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Learn how to make Kosair Charities part of your planned giving.
Charitable Gift Annuity Example
A 70 and 68 year old husband and wife want to increase their retirement income and provide a gift to a charitable organization. The best current return rate they can get is 5% or $1,500.00 on their $30,000.00 CD. If they purchase a charitable gift annuity it will yield a guaranteed 5.8% return.
Investing their $30,000.00 in an annuity guarantees them $1,740.00 annual income for as long as either of them is living ($970.92 tax-exempt income and $769.08 ordinary income). They are allowed an income tax deduction of $9,613.00.
Another way to reach the same tax deduction of $9,613.00 would be for the husband and wife to fund the annuity with appreciated property bought several years ago at $15,000.00 now worth $30,000.00. Annual income received would be $ 1,740.00, of which $485.00 capital gain, and $769.00 ordinary income.
For example if the charitable annuity is funded with $30,000.00 Cash the breakdown would be as follows:
Annual income for life | $1,740.00 |
Tax exempt income | $970.00 |
Ordinary income | $769.08 |
Contribution deduction | $9, 613.00 |
Income tax savings from deduction (up to 35%) | $3,364.55 |
If the charitable annuity is funded with Appreciated Property costing $15,000 originally now worth $30,000 the annual $1,740 income would be as follows:
Tax exempt income | $485.53 |
Gains tax income | $485.39 |
Ordinary income | $769.08 |
Contribution deduction | $9,613.00 |
Income tax savings from deduction | $3,364.55 |
$1,740.00 is paid for the life expectancy of a donor/s (21.4 years) after which the $1,740.00 is ordinary income.
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