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Charitable Gifting

Collections and Estate Planning – Charitable Gifting

Part 4 of 4

Collections as Charitable Gifts: What You Need to Know

How do you feel when you think about giving or donating your collection? Does it fill you with excitement to give something that has brought you so much joy? Or are you worried that you don’t have anyone in your family who will appreciate it? Perhaps they may even sell it. The answer might lie in donating your collection with charitable gifting.

For many collectors, finding the right “home” for their collections when they’re no longer able to enjoy them is a priority. You may decide to give the collection to one or more family members. You may also decide to sell the collection to someone who will appreciate it. But you also have a third option; donating your collection to charity.

For tax purposes, gifting your collectibles to charity only makes sense if the property has appreciated significantly. This is no difference as to gifting your appreciated stocks from your investment portfolio.

Charitable Gifting Requirements for Your Collection

There are numerous requirements to qualify for a tax-deductible gift when you donate collectibles to charity. The gift of tangible property must satisfy the following criteria:

  1. You are donating to a qualified 501(c)3 charitable organization. This is no different from any other charitable gift. You should ask for proof that the organization is a recognized charitable nonprofit.
  2. The items are qualified capital gains property. In general, this means that you have held the property for more than one year, and you did not create the property yourself. If your collection includes items you made, such as artwork, you would only be able to deduct the cost of materials. And you also must assure that you were not gifted the property by the artist, creator, etc.
  3. The receiving organization must make “related use” of the donation. Your gift must relate to the tax-exempt purposes of the charity to which it’s donated. In other words, the organization must use your donation to fulfill their mission. For example, donating a piece of art to a museum for display — the key being that the piece fulfills the museum’s mission by virtue of being on display for visitors.  As you can imagine, the “related use” rule can be quite challenging if you are looking to donate a unique item. 
  4. The donated property must have a qualified appraisal. The IRS requires a qualified appraisal if the gift of property is greater than $5,000. If the gift is greater than $20,000, then a copy of the signed appraisal must be included with the tax return filing.

If you can satisfy all of the above requirements, then gifting your collection to charity might be an option for you. The next step would be determining the most appropriate and efficient means of making your gift. For example, outright or utilizing a charitable trust.

Your RegentAtlantic Wealth Advisor can help determine the most efficient way to make your desired charitable gift within the framework of your overall financial picture.

Part 1 of 4: How Your Collections and Collectibles Affect Your Estate Plan

Part 2 of 4: Division of Assets

Part 3 of 4: Potential Tax Concerns for Collectors and Collection Owners

Important disclosure information

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This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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