Tower Hill School BI/PI-1
Gift of Business Interests or Partnership Interests You may have business or partnership interests that could benefit Tower Hill School due to certain tax advantages associated with charitable giving. Your interests might be in a real estate partnership, or perhaps in closely-held stock from a family business. Whatever the case may be, tax-wise planning with your attorney and financial advisor could result in a meaningful gift to Tower Hill School without affecting your outright cash holdings. Gifts of Closely-Held Stock If you own shares in a closely-held business (a family business, for example), you might consider making a gift of some shares to Tower Hill. As a donor, you would receive a charitable income tax deduction for the appraised value of the closely-held shares…even if there is no market for the shares and the cost basis of those shares is $0. If you would like to arrange for additional income for yourself, you might consider donating your closely-held shares to a FLIP Unitrust (in the same vein as the charitable remainder unitrust) and receive a twofold benefit: 1) a charitable income tax deduction and 2) income for life – or for a term of years. In particular, if your closely-held company does not pay dividends, a FLIP Unitrust can be a tax-wise way of converting nonincome-producing shares into income-producing assets (a trust, in this case) without paying capital gains tax. How to Donate Closely-Held Stock § Give a stock certificate for x shares to Tower Hill School § Provide a Stock Power in a separate envelope (according to normal procedures when giving a gift of securities) § Tower Hill will present the shares back to your company for repurchase or “redemption” in exchange for cash. There are other potential tax benefits for your company vis-à-vis such a stock redemption which your business attorney could highlight for you. Before making any donation of closely-held stock, please secure a qualified appraisal of your business and its stock, and verify that there 1) no restrictions on the transfer of your stock; 2) that you do not enter into any prior written agreement with your company concerning the re-purchase of your stock; and 3) the shares are not subject to a mortgage or other debt. Any of the above could trigger a taxable event for you. Gifts of Partnership Interests Gifts of transferable partnership interests (i.e. real estate, oil & gas, general business, LLC) can benefit both you and Tower Hill School. These interests can be given as outright gifts, but could potentially be used to set up a life-income vehicle such as a charitable remainder trust. You can give them now or through your estate plan. This kind of gift qualifies for a charitable deduction based on the difference between your share of the fair market value of the partnership’s assets and your share of the partnership’s liabilities. As with gifts of closely-held stock (see above), you should consult with your
Tower Hill School BI/PI-1
attorney and financial advisor(s) before making the gift. Tower Hill School will be happy to work with your financial team as part of that process. The aforementioned estate planning ideas, descriptions, and illustrations are provided as an educational service and should not be interpreted as financial or legal advice. Please consult your own financial and legal advisors for the plans and instruments most appropriate to your particular circumstances. For any and all inquiries related to planning a gift or for a confidential meeting, please contact the Development Office, Tower Hill School, at (302) 657-8353. We are happy to work directly with your attorney(s) and/or financial advisor(s).
Published on Nov 2, 2011