Tangible Property
Gifts of tangible property may provide larger capital gains tax savings than other long-term appreciated property (assuming it is something UMass Law can use for a charitable exempt purpose).
Tangible personal property includes items such as:
- Artwork
- Antiques
- Jewelry
- Rare book collections
- Collectibles
- Cars
A gift of tangible personal property works like this:
- You and your client will likely want to begin by talking with us about the proposed gift to determine if it is something we can accept and, if so, if it will be used for our charitable exempt purpose.
- The donor will obtain a qualified appraisal for their gift item(s).
- The donor makes an outright gift of tangible personal property to UMass Law.
- The gift qualifies for an immediate income tax charitable deduction for either the full fair market value (if we can use it for our charitable purposes) or for the donor’s cost basis in the property.
- Assuming the property has appreciated in value, the donor owes no capital gains tax on the donated property—a significant savings since collectibles are taxed up to 28%, versus appreciated real estate or securities, which are only taxed up to 20%.
- UMass Law will either keep the property for the use of one (or more) of the campuses or sell it and use the proceeds to further the university's mission.
Other ways to give tangible personal property
- A bargain sale. It may be possible for a donor to make a bargain sale of their tangible personal property. In other words, they sell it to us for less than its actual fair market value, meaning they get both proceeds from the sale and an income tax charitable deduction (and possible capital gains tax benefits) for the gift portion of the transaction.
- A gift in a will or living trust. A donor could also choose to keep their property during life and donate it to us at death through a gift in their will or living trust.
Evaluate the fit.
A gift of tangible personal property may be a particularly good option for those who want to:
- Minimize or eliminate the capital gains tax due on appreciated collectibles
- Qualify for an immediate income tax deduction
- Make an extended impact on UMass Law with a gift that we can use or sell
See how it works.
Kyle calls us to discuss donating a rare collection of books. If we can use the book collection for our tax-exempt purpose, Kyle’s gift will qualify for a deduction for the full fair market value of the collection. If not, he can deduct only his cost basis in the collection. Kyle obtains a qualified appraisal on the collection and makes the gift, not only benefiting from the deduction but also bypassing any capital gains tax he would have owed if he had sold the collection.
Consider the timing.
It may take some time for us to determine if and how we can use the donated property and for the donor to obtain a qualified appraisal. If your client wants the deduction this year, it is best to start the process as early as possible.
The UMass Dartmouth Advancement Team can help.
We are happy to discuss any items your clients may wish to donate. We can determine how they will be used, what the donor’s benefit will be, and how long it may take to complete the gift process.