Example #1
•
Assumption: Owner is in high-income bracket ($1,250,000+ per
annum)
• Property is
appraised at $2,000,000 or more
• Owner does not
need funds from sale
• Owner, family
and advisors understand the benefits of philanthropic
giving
|
Cost basis of property:
|
$ 1,500,000
|
|
Current estimated market value of
property:
|
2,000,000
|
|
Adjusted average annual gross income
of Donor:
|
1,250,000
|
|
Annual State/Federal Income Tax
liabilities (about 50%):
|
625,000
|
|
Charitable deduction allowed when
donated:
|
1,875,000
|
|
Tax deduction permitted in year 1: 30% of
$1.25M =
|
375,000
|
|
Tax deduction permitted in year 2: 30% of
$1.25M =
|
375,000
|
|
Tax deduction permitted in year 3: 30% of
$1.25M =
|
375,000
|
|
Tax deduction permitted in year 4: 30% of
$1.25M =
|
375,000
|
|
Tax deduction permitted in year 5: 30% of
$1.25M =
|
375,000
|
|
Total
deduction permitted:
|
$1,875,000
|
In the above case, if the property is sold at
the asking price (and how often does that happen?), the owner
would have a gross profit of $500,000.
If capital gains apply, it may result in a 20%
capital gains tax of $100,000. With the cost of the real estate
commission further deducted, the owner would receive a total of
$1,720,000 for the property from a direct sale. If a lesser offer
is accepted, then further deduct that amount.
However, when the property is donated to the
Arts Alliance, the owner may take annual charitable deductions of
up to 30% of his adjusted gross income each year ($375,000 in this
case) for up to five years, for a savings of
$1,875,000.
This is money that would have been paid
directly to the government.
Instead, the donation to the nonprofit will
offset the entire amount over five years.
The difference between a sale and a donation is
a $155,000 advantage to you, the donor.
Example #2
• Assumption: Owner is in
high-income bracket ($800,000+ per annum)
• Property is appraised at $1,250,000
or more
• Owner does not need funds from sale
• Owner, family and advisors understand
the benefits of philanthropic giving
|
Cost basis of property:
|
$850,000
|
|
Current estimated market value of
property:
|
1,250,000
|
|
Adjusted average annual gross income
of Donor:
|
800,000
|
|
Annual State/Federal Income Tax
liabilities (about 50%):
|
400,000
|
|
Charitable deduction allowed when
donated:
|
1,200,000
|
|
Tax deduction permitted in year 1: 30% of
$800K =
|
240,000
|
|
Tax deduction permitted in year 2: 30% of
$800K =
|
240,000
|
|
Tax deduction permitted in year 3: 30% of
$800K =
|
240,000
|
|
Tax deduction permitted in year 4: 30% of
$800K =
|
240,000
|
|
Tax deduction permitted in year 5: 30% of
$800K =
|
240,000
|
|
Total
deduction permitted:
|
$1,200,000
|
In the above case, if the property is sold at
the asking price the owner would have a gross profit of $400,000.
If capital gains apply, it may result in a 20% capital gains tax
of $100,000. With the cost of the real estate commission further
deducted, the owner would receive a total of $1,075,000 for the
property from a direct sale. If a lesser offer is accepted, then
further deduct that amount.
However, if the property is donated to the Arts
Alliance, the owner may take annual charitable deductions of up to
30% of his adjusted gross income each year ($240,000 in this case)
for up to five years, for a savings of $1,200,000.
This is money that would have been paid
directly to the government.
Instead, the donation to the nonprofit will
offset the entire amount over five years. The difference between a
sale and a donation is a $125,000 advantage to you, the
donor.
Example #3
• Assumption: Owner is in high
income bracket ($375,000 + per annum)
• Property is appraised at
$550,000
• Owner does not need funds from sale
• Owner and his financial advisors
understand benefits of philanthropic giving
|
Cost basis of property:
|
$250,000
|
|
Current estimated market value of
property:
|
550,000
|
|
Adjusted average annual gross income
of Donor:
|
375,000
|
|
Annual State/Federal Income Tax
liabilities (about 45%):
|
400,000
|
|
Charitable deduction allowed when
donated:
|
550,000
|
|
Tax deduction permitted in year 1: 30% of
$800K =
|
112,500
|
|
Tax deduction permitted in year 2: 30% of
$800K =
|
112,500
|
|
Tax deduction permitted in year 3: 30% of
$800K =
|
112,500
|
|
Tax deduction permitted in year 4: 30% of
$800K =
|
112,500
|
|
Tax deduction permitted in year 5: 30% of
$800K =
|
100,000
|
|
Total
deduction permitted:
|
$550,00
|
In the above case, if the property is sold at
full value, the owner would have a gross profit of $300,000. If
capital gains apply, it may result in a 20% capital gains tax of
$60,000. With the cost of the real estate commission further
deducted, the owner would receive a total of $457,000 for the
property from a direct sale. If a lesser offer is accepted, then
further deduct that amount.
However, if the property is donated to the Arts
Alliance, the owner may take annual charitable deductions of up to
30% of his/her adjusted gross income each year ($112,500) for up
to five years, for a total savings of $550,000.
Again, this is money that otherwise would
have been paid directly to the government.
Instead, the donation to the nonprofit will
offset the entire amount over five years. The difference between a
sale and a donation is a $93,000 advantage to you, the
donor.
QUESTIONS YOU MAY HAVE:
How does this program serve
me and the community?
This is an excellent opportunity for
you to participate in building the cultural future of our
community; to be able to feel really good about supporting
worthy programs; and take control of your tax situation. How
many opportunities do we have to allocate money that would
otherwise end up in federal coffers, into a positive, local
community organization?
The arts in America are in great need of
private support at this time, as local, state and federal
agencies continue to cut cultural and educational programming.
The Arts Alliance serves a broad range of activities, from
assisting with cultural programs for children, to supporting
local museums, to incubating the Pacific Institute for Futures
Studies and a new art museum at the soon to be opened Cal State
Channel Islands in Camarillo.
Your donation will help us with these vital
projects. The real estate donation program is a win-win for all
involved; the donor, our nonprofit charity, and the people we
serve.
Are you willing to speak to
my tax advisor or attorney?
We are willing and eager to explain
this system to any advisor or family members, and will provide
all backup information you or they may require to effect a
gift.
What is the Arts Alliance
and what is its background?
The Arts Alliance received its
nonprofit charitable status and has been active since 1985,
initially as the "Patrons of the Cultural Arts of Oxnard". We
are recognized by the Internal Revenue Service as a nonprofit
educational/charitable organization which qualifies as a "50%"
charity (explained in the IRS publications). Originally we
focused on being the primary nonprofit support organization for
the Carnegie Art Museum and the Performing Arts Center of
Oxnard. Our organization changed its name in 1995 to "Arts
Alliance of Ventura County" to include a broader range of
support for more cultural organizations in the county.
The Arts Alliance supports, promotes and
produces activities that pertain to the visual, literary and
performing arts. Since its inception, we have sponsored
numerous exhibitions, lectures, educational activities and
performances. The Arts Alliance also has financially aided
several start-up nonprofit organizations, and is currently
working on developing the Pacific Institute for Futures Studies
and creating a new International Art Museum at Cal State
University Channel Islands. We produce the annual "Celtic Lands
Faire", celebrating the music, art and culture of several
European nations. A special project has been a formal concert
of "new" Celtic music and composers each year.
The Arts Alliance has received grants from
the federal, state and county governments. We have produced
fund raisers to benefit the City Art Collection housed at the
Carnegie Art Museum. We successfully campaigned to save a
portion of the magnificent Doheny Art Collection when it went
to auction in 1985. The Arts Alliance has collected thousands
of dollars in donations for the renovation of the Performing
Arts Center in Oxnard.
We have provided support to bring thousands
of school children to performances at the Oxnard Performing
Arts Center. Donations have also been made in support of the
Ventura County Master Chorale, the Ventura County Museum of
History & Art, the Ventura County Maritime Museum at
Channel Islands Harbor and Gull Wings Children's Museum.
Grants have been received from the
Dayton-Hudson Foundation for art education; Procter &
Gamble for support of exhibitions and performances; the
Institute of Museum Services for restoration of portions of the
Oxnard City Art Collection; the Institute of Human Development
for a lecture series on creativity, the California Arts Council
and the Ventura County Arts Coalition for administrative
support.
Who are the people that run
the Arts Alliance?
The board of trustees and advisors are
extremely experienced administrators from both the nonprofit
and corporate worlds. The current officers include: Andrew C.
Voth, president and executive director, with thirty years
non-profit management experience; Ron C. Voth, MBA, chief
financial officer and treasurer, with thirty years of corporate
management experience; producer/director Tom McGowan,
vice-president, and Christine Ann Voth, former Ventura County
Arts Planner, as director of special projects and board
secretary. Attorney Alexandra J. Noble is our legal advisor.
Advisory boards with highly qualified individuals are brought
together for input on special projects such as the Celtic Lands
Faire, museum projects, exhibits, lectures, youth projects and
other activities.
The Arts Alliance of Ventura County has been
staffed for the past fifteen years entirely by unpaid
volunteers. During 1999 we have finally been able to provide
some salaries for our primary workers. Our financial records
are open to any agent or donor who would like to see them. To
date, more than $1,000,000 in cash and artwork donations have
been distributed to local arts organizations by the Arts
Alliance of Ventura County.
Please Note: this material is designed to
provide general guidelines and information in regard to the
subject matter covered. It is provided with the understanding that
the Arts Alliance of Ventura County is not engaged in rendering
legal, accounting or other professional advice. If legal,
accounting, real estate or other assistance is required, the
services of a competent professional should be sought. We have a
more comprehensive package available which includes the IRS
publications, information about how to donate and forms that are
used to make the donation. Also, we will be happy to meet with you
and your donor to explain the program. If you have any further
questions, please contact the Arts Alliance.
