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  2. Reduce Capital Gains Tax and Other Tax Benefits

Reduce Capital Gains Tax and Other Tax Benefits

Reducing capital gains tax is one of the primary reasons that donors select donor advised funds (DAFs) as a gifting vehicle.The donor will incur no capital gains tax on gifts of appreciated assets such as securities, real estate, or other illiquid assets. Four additional tax benefits include:

1. You receive an immediate income tax deduction in the year you contribute to your DAF. Since AEF is a public charity, contributions immediately qualify for maximum income tax benefits. The IRS does mandate some limitations, depending upon your adjusted gross income (AGI):

  • Deduction for cash – up to 60 % of AGI.
  • Deduction for securities and other appreciated assets – up to 30 % of AGI.
  • There is a five-year carry-forward for unused deductions.

 

 

2. Your DAF will not be subject to estate taxes.

3. Your investments in a DAF can appreciate tax-free.

4. If you are subject to alternative minimum tax (AMT), your contribution will reduce your AMT impact.

 

 

Other Tax Considerations

Donors can deduct the full market value of certain contributed assets, subject to the AGI limitations listed above. These assets include:

  • Closely held stock (C-corp or S-corp)
  • Real estate

Note: The information provided herein is for informational purposes only and should not be interpreted to constitute legal and/or tax advice. Donors should consult their legal and tax advisors regarding their specific situations.

For more information, call us at 1-888-440-4233.


"AEF provides a wealth of resources for advisors and their clients to help individuals and families give back. This includes but is certainly not limited to donor advised funds.

On multiple occasions, I have reached out to or referred others to the AEF team with unique issues or questions related to clients’ charitable goals.

The professionals at AEF have consistently proven to be responsive, knowledgeable, thorough, flexible, and friendly."

Clare Golla, CFP®​
Bernstein
Private Wealth Management

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