Catherine Posted October 27, 2020 Report Posted October 27, 2020 Client gave a relatively small amount to an organization as a charitable gift annuity, and has in his notes that half is deductible. Is it standard for half the amount given to be a year-of-setup tax deduction? There are no docs from the charity (and would probably say "check with your tax professional" anyway). It's been a while since I've dealt with a fresh one of these, and my searches so far have given me all kinds of info on distributions, but nothing on year of donation other than vague "some is a deduction" wording. Am terrified of having to ask the client; he's got some dementia and I just this past weekend got (most of) the 2019 docs, and those only because his granddaughter has been working with him to get them in order. (Yes, I have written permission to talk to her - but she's a tax neophyte herself so it's almost as useless as asking him.) 1 Quote
DANRVAN Posted October 28, 2020 Report Posted October 28, 2020 21 hours ago, Catherine said: has in his notes that half is deductible. If it was only that easy! Actually the year of donation deduction is the dollar amount of the initial contribution less the present value of the annuity distributions back to the donor based on life expectancy. 3 Quote
Catherine Posted October 28, 2020 Author Report Posted October 28, 2020 1 hour ago, DANRVAN said: If it was only that easy! Actually the year of donation deduction is the dollar amount of the initial contribution less the present value of the annuity distributions back to the donor based on life expectancy. So I need to ask them for the charity's contract or letter? Heaven help me! 1 Quote
Abby Normal Posted October 28, 2020 Report Posted October 28, 2020 It's been awhile since I had one of these, but there are calculators if all else fails. https://nationalgiftannuity.org/gift-annuity-calculator Edit: Just tried that calculator and it doesn't give you what you need, but you could use it along with an amortization calculator to get NPV. 1 Quote
jklcpa Posted October 28, 2020 Report Posted October 28, 2020 (edited) Catherine, here is a calculation I did back in 2015 for one that I had that didn't provide the calculations. This client had done another one in 2013 that had all of the calcs laid out for me that I followed. Here is the 2015 calc: charitable gift annuity deduction.pdf And here is the one that I followed that you may also find helpful: 2013 Charitable gift annuity example.pdf Edited October 28, 2020 by jklcpa reduced file sizes of pdfs 1 Quote
Margaret CPA in OH Posted October 28, 2020 Report Posted October 28, 2020 I'm glad I've had to deal with only Charitable Remainder Unitrusts! Relative piece of cake... 1 Quote
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