NASE Blogs

My wife and I would like to give some of our estate to charity. What are the rules?

Mar 23, 2011

The IRS divides charities into two general groups: 50-percent charities and 30-percent charities. Generally churches, schools, hospitals, governmental units and certain qualifying foundations are considered 50-percent charities. Organizations that don’t qualify as 50-percent charities are considered to be 30-percent charities.

Gifts to qualifying charities are subject to different rules and depend upon the gross income of the donor, whether or not the donor is an individual or a corporation, the type of property donated and whether the donee/recipient is a 50-percent or a 30-percent charity.

If you as an individual want to donate cash to a 50-percent charity the total available deduction is limited to 50 percent of your adjusted gross income (with a five year carryover). If you donate cash to a 30-percent charity, the total deduction is limited to 30 percent of your adjusted gross income (with a five year carryover).

If you wish to donate property the limitations depend upon whether the property is ordinary income property, long-term capital gain property or tangible personal property unrelated to the charity’s purposes.

Qualified appraisals are usually required for non-cash gifts valued at more than $5,000 and closely-held stock worth more than $10,000.

If you are looking for a substantial tax deduction for a charitable gift or gifts you are strongly urged to seek the advice of an attorney or C.P.A. who specializes in tax law. 

And finally, remember that it is legal to try to reduce the impact of inheritance and estate taxes just as it is legal to try to reduce income taxes by utilizing every possible legal deduction.  You might be able to benefit many individuals less well off than you are by making a charitable contribution which also reduces the death tax impact on your estate.

Courtesy of