Closely Held Stock: Owners of closely held or family businesses are often very involved in the community. Your client might be thinking about creating a family foundation - but has discovered that there are restrictions applying to private foundations and closely held business interests. A partnership with the Dade Community Foundation is a cost-effective way to maximize and target charitable involvement while minimizing tax liability. The community foundation can be particularly helpful in the following instances:

• Helping to pass ownership of the company to children or key employees while not straining available assets and liquidity
  
  
• Selling the company and planning to minimize estate taxes
  
  
• Getting equity out of the company to provide income for your client
  
  
• Creating a family philanthropic program using the assets of your client's business

Real Estate: Gifts of real estate can include a house, apartment building, farm, vacation home, commercial buildings and income-producing and non-income-producing land. A donor can make an outright gift of real property now or through the estate - or use it to fund a charitable remainder trust that provides income to the donor or the donor's children. A gift of real estate typically requires certain procedural steps, including a site visit to the property, a qualified appraisal, a preliminary title report and an environmental assessment. (Frequently Requested Documents (Gift Acceptance Policy Real Estate)

Life Estates: A donor can benefit today from the future gift of a home, be it a primary residence or vacation home. The donor can continue to live in the home for life and enjoy a current income tax deduction. The community foundation will ultimately sell the property and use the proceeds to support the charitable organizations or purposes the donor identifies.

Life Insurance Policies: Many people find that the protection offered by the life insurance policies is no longer needed later in life. A life insurance policy ran become an ideal tool for charitable giving. The procedure is simple - you start by irrevocably assigning your insurance policy to the community foundation. The community foundation is also named beneficiary of the policy. You can make annual tax-deductible contributions to cover the policy's annual premium. Or, if the policy is paid up, you will receive an immediate tax deduction in an amount equal to the policy's cash surrender value. Any type of fund can be established with a gift of life insurance. This creative strategy can enable a donor to make a much larger gift than he/she might have thought possible. For more information see Professional Notes / January 2001: Charitable Gifts Using Life Insurance

Royalties and Intellectual Property Rights: There are many ways to promote charitable interests using royalty payments and other interests, from assigning royalty points to making transfers of income-producing intellectual property rights such as books, movies and images.

Tax Advantages

Tax and Regulatory Issues: Contributions to and funds in community foundations enjoy preferential tax treatment in a number of ways:

Deductibility of Charitable Gifts: Even though community foundations are actually aggregations of separate funds, they qualify as publicly supported charities under Internal Revenue Code sections 501(c)(3) and 170(b)(1)(A)(vi). That status entitles community foundation donors to tax deductions that are often superior to those accorded private foundation donors. These differences particularly affect clients who make large intervivos gifts relative to income or who contribute appreciated property other than publicly traded stock.

For example, for gifts of cash, donors to community foundations may deduct up to 50 percent of adjusted gross income (AGI) in the year of gift, with a five-year carryover for excess contributions. Private foundation donors may deduct up to 30 percent of AGI with the same carryover.

Community foundation donors who contribute gifts of appreciated property (other than tangible personal property) can deduct them at full market value up to 30 percent of AGI. Private foundation donors may deduct only gifts of publicly traded stock at fair market value up to 20 percent of AGI; all other forms of appreciated property, including closely held stock and real estate, are deductible at cost only.

For a complete description of the tax and regulatory advantages offered by a community foundation; 'A Private Foundation or a Fund in a Community Foundation Weighing the Option'

Ruth Shack, President of Dade Community Foundation, Joe Pena, Director of Development and Communications, and Cristina Mendoza, Foundation Board Member.