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Posted November 30th, 2015

When Is a Gift Complete for Tax Purposes? Pt 1

Money Tied With A Ribbon On The Computer Keyboard On The Rough Wood Background

Another way to ask the question is, what is the date of gift? This question is important for two reasons. First, the date of gift is the valuation date for federal income tax purposes. Second, the date of gift is the date on which the gift is made for tax purposes. In year-end giving, the date of gift can be crucial; it can mean the gift is made in December rather than in January, or vice versa.

Checks – A gift made by check is complete for tax purposes [a] when the check is hand-delivered to someone authorized to accept the check as a donation or [b] if the check is mailed by USPS, on the date of mailing (which may or may not be the postmark date), assuming the check clears the donor’s bank in due course.

Stock certificate accompanied by stock power – Same basic rules here as for checks.

Stock that is wired DTC – The tax law is unclear here. The gift may be complete for tax purposes on the date the stock is wired out of the donor’s account (DATE 1), or it may be complete on the date the stock lands in the donee organization’s account (DATE 2). No one can say for sure whether it’s Date 1 or Date 2. The donor, not the donee, must decide whether to use Date 1 or Date 2 for purpose of claiming a charitable deduction.

PART II will explore the date-of-gift rules for real estate, personal property, gift annuities and charitable remainder trusts.

PART III will explore a critically important related matter: gift receipts.

Stay tuned and contact a Sharpe Group representative if you have questions pertaining to a date of gift.

by Jon Tidd

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