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Giving hard-to-value assets: It’s not just for real estate anymore

You are no doubt familiar with the many benefits of giving hard-to-value assets to a charity – and especially to a client’s Donor Advised Fund at the Community Foundation. Because the Community Foundation is a public charity, your client is eligible for the maximum allowable tax deduction for their contributions. This is because a client typically can deduct the fair market value of the asset given to the fund, and, furthermore, when the fund sells the asset, the Community Foundation (as a public charity) does not pay capital gains tax. This means there is more money in the Donor Advised Fund to support charities than there would be if your client had sold the hard-to-value asset on their own and then contributed the proceeds to the Donor Advised Fund. 

Individuals can take advantage of giving hard-to-value assets, and so can businesses. For example, when a business is sold, its owners may find themselves with artwork, insurance policies, or real estate on their hands, any of which can be donated to a Donor Advised Fund with the favorable tax treatment described above. Gifts of real estate have long been popular –  although still underutilized – gifts to charity, sometimes making up nearly 3% of the value of all charitable contributions in any given year.


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