Last Minute Gifts Can Reduce 2009 Taxes

Late 2009 can be a good time to make tax-saving contributions.  The stock market has been on a tear since last March, and donors ideally should make gifts with stocks and bonds in which they have a large paper profit (long-term capital gain).  The profit escapes tax and the charitable deduction will be the investment’s full fair market value, if held more than one year. Note:  Gifts of securities may be deducted up to 30% of your adjusted gross income, with a five-year carryover for excess deductions.

If you want to ensure that gifts made in December are deductible for 2009, keep these rules in mind:

• Checks will be deductible if mailed and postmarked no later than December 31, 2009;
• Stock certificates and separate stock powers can be mailed and deducted for 2009 if the envelopes are postmarked by December 31, 2009;
• Securities held by your broker in “street name” are deductible as of the date they are received electronically in our account – no later than December 31, for 2009 deductibility;
• Gifts charged to a credit card are deductible as of the date the charge is “made” – but the IRS has clarified that the date the gift is actually “made” is the transaction posting date, which might not occur until January for a December 31 charge;
• Other gift assets are deductible on the date they are “delivered” to charity – usually involving physical transfer of an item or deed to the organization’s representative.

Here are examples of the tax savings that are available in different tax brackets.

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