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Charitable Gift Types

Pooled Income Fund Yearly Rate of Return

The deduction computation for a gift to a pooled income fund depends on the fund's valuation rate.  This valuation rate, in turn, is determined by the fund's historic yearly rate of return once the fund is three or more taxable years old.  The valuation rate for a gift equals the highest of the fund's yearly rates of return in each of the three calendar years prior to the gift.

The valuation rate for a fund that is less than three taxable years old is mandated by the IRS and is based on the average of the monthly IRS discount rate over the past three calendar years.

Pooled Income Fund

A pooled income fund ("fund") is a gift plan defined by federal tax law that allows a donor to provide income to herself or others for life while making a generous gift to charity.

Non-Grantor Lead Trust

The non-grantor lead trust is the most common form of charitable lead trust.

During the trust term, typically a fixed number of years, the trust makes payments to one or more charities. When the trust terminates, it distributes its remaining principal to individuals named by the donor, typically family members.

A non-grantor lead trust is treated as an independent taxable entity that is responsible for all of its own taxes and accounting. It pays tax on income, including realized capital gain income, that is in excess of its charitable payments.

Massachusetts 2-G

The Massachusetts 2-G is a Massachusetts state tax form for reporting income, deductions, credits, etc. of a grantor-type trust.  Massachusetts charities report pooled fund income to their Massachusetts participants on this form.

Depreciable Portion

In the context of planned giving, "depreciable portion" is relevant to retained life estatesRetained_Life_Estate only. The depreciable portion is the value of the buildings and should be listed separately in a qualified appraisal of the real estate. In most cases, the only building in a retained life estate is a house.

You must know the depreciable portion to compute the deduction for a retained life estate.

In contrast, the undepreciable portion is the value of the land that comes with the buildings in a retained life estate.

Deferred Gift Annuity

A deferred gift annuity is a simple contract between the donor and the charity.

In exchange for an irrevocable gift of cash, securities, or other assets, the charity agrees to pay one or two annuitants a fixed sum each year for life, with payments starting at least one year after the gift. The annuitants typically are the donor or the donor and the donor's spouse. The older the annuitants are at the time of gift and the longer payments are deferred, the greater the fixed income the charity can agree to pay. The donor receives an income tax deduction for the difference between the amount transferred and the value of the annuity, subject to IRS 30%/50% limitations. The donor's deduction must be at least 10% of the funding amount.

Commuted Payment Gift Annuity

Sometimes called a “Tuition Assistance Plan,” a commuted payment gift annuity is a simple contract between the donor and the charity.

The commuted payment gift annuity is really a modified deferred gift annuity. In exchange for an irrevocable gift of cash, securities, or other assets, the charity agrees to pay one or two annuitants a fixed sum each year for life, with payments starting at least one year after the gift. The contract includes language, however, that gives the annuitant the option to commute the lifetime of payments to a fixed number of payments of equivalent value. The annuitant may commute the payments immediately or at any time prior to the date of first payment.

Charitable Remainder Unitrust with Net Income and Makeup Provisions

A net income charitable remainder unitrust ("unitrust") is a gift plan defined by federal tax law that allows a donor to provide income to herself and/or others while making a generous gift to charity. The income may continue for the lifetimes of the beneficiaries, a fixed term of not more than 20 years, or a combination of the two.

Charitable Remainder Unitrust

A charitable remainder unitrust ("unitrust") is a gift plan defined by federal tax law that allows a donor to provide income to herself and/or others while making a generous gift to charity. The income may continue for the lifetimes of the beneficiaries, a fixed term of not more than 20 years, or a combination of the two.

Charitable Remainder Annuity Trust

A charitable remainder annuity trust ("annuity trust") is a gift plan defined by federal tax law that allows a donor to provide income to herself and/or others while making a generous gift to charity. The income may continue for the lifetimes of the beneficiaries, a fixed term of not more than 20 years, or a combination of the two.

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