How much should you each give to our Building 2020 vision?
No one on the Capital Campaign Committee can tell you that. But we can show some simple arithmetic that may give you some idea. There are about 150 households at Westmoreland that give a total of about $600,000 each year toward the church’s annual operating budget (Annual Fund). If all 150 households gave a total amount over the course of the Campaign equal to 3-1/2 times their Annual Fund Pledge to the operating budget, that would just about do it. Of course, not everyone can give that much. But some can. And some can give more -- particularly in view of the fact that this may be a substantial part of our legacy for the next 50 years!
How and when you contribute to the Capital Campaign can make a really big difference in your personal tax picture and have a big impact on the timing of your gift, which in turn may significantly improve Westmoreland’s cash flow during the project (and, in turn, how large our construction loan must be!).
Please take a few minutes to review the following section, “SUMMARY OF TAX DEDUCTIBLE OPTIONS,” provided by John Edie who has extracted relevant information from the IRS publications. While this is not intended to replace any advice from your accountant or financial advisor, it may help with some ideas that you may not have considered before.
SUMMARY OF TAX DEDUCTIBLE OPTIONS
As you consider making a gift/pledge to the church’s Capital Campaign, we are providing you with some basic guidance about Federal charitable tax deductions. This information (and more) can be found in IRS Publication 526.
This summary should not be considered tax advice as it merely repeats what IRS has indicated in this publication and related complications could come into play. This summary does not include information about state tax deductions that will vary from state to state.
As always, you should carefully review any such decisions with your tax advisor.
Gifts of Cash
Deductible up to 50% of your Adjusted Gross Income (AGI) for the year in which the gift is made. AGI is the dollar amount calculated at the bottom of page 1 of your Form 1040 tax return. If you exceed 50%, the excess may be carried forward and deducted over the next 5 years.
Gifts of Capital Loss Property
This is rarely gifted – it is generally more advantageous to sell the stock, recognize the loss, and give the cash generated.
Gifts of Long-Term Capital Gain Property (such as publicly traded stock)
This option is popular, because the donor (within the rules) may claim a charitable deduction for the fair market value of the appreciated property and avoid paying any income tax on the gain. More specifically, the full value of the transferred stock equals the number of shares times the average of the high and low price on the day of transfer. The property must be held more than one year to be considered long-term. If the property is held for less than a year, it is short-term capital gain property and the donor may deduct only his or her cost (or basis) and not the gain. The limit on gifts of long-term gain deductions is 30% of AGI (see above) and is also eligible for a 5-year carryover if you exceed 30%. The property (usually publicly traded stock) should be transferred directly to the church’s account. If you sell it first and then transfer the proceeds, you will be liable for tax on the realized capital gain.
Gifts of a Mix of Cash and Capital Gain Property
Such a combination is possible but the limitations on what can be deducted are more complex and should be reviewed carefully with your tax advisor.
Transferring Cash or Assets from an Individual Retirement Account (IRA)
Congress recently made the IRA Charitable Rollover a permanent part of the Internal Revenue Code. Thus, an owner of an IRA account who is at least 70.5 years oldmay direct up to $100,000 per year to a qualifying charity such as the church and not be required to pay any income tax on the transfer from the IRA. However, no charitable deduction is permitted but the donor avoids all the income tax that normally applies to any withdrawal from an IRA. Persons age 70.5 or older are subject to a Required Minimum Distribution (RMD). Transfer to an eligible charity from the IRA counts towards meeting the RMD. If the donor’s RMD is already satisfied, he or she may still make a tax-free transfer to an eligible charity up to $100,000. [NOTE: To qualify, the funds must be transferred directly by the IRA trustee to the church. If the funds are sent to the owner of the IRA and then to the church, the distribution is taxable to the donor].