“Just the facts, ma’am.”
That’s what the Jack Webb character always said on Dragnet. The same applies to charitable gift planning, to donor situations, where the law is usually clear, but what’s often unclear are the facts.
For example, a donor says, “I own a corporation that has some real estate. I’d like to give the real estate.” This is the sort of statement one hears working in gift planning. It cannot be taken at face value, however, because taken at face value the statement is meaningless.
Why meaningless? Two reasons:
The donor doesn’t “own the corporation.” The donor owns stock in the corporation. That’s what the donor owns.
The donor can’t give the real estate, because he doesn’t own it. The corporation does. If any party is going to give the real estate, it’s going to be the corporation. Which possibly leads to various tax questions, such as: if the corporation makes the gift, who—if anyone—gets a charitable deduction for the gift? But at least the tax questions are questions of law, which ordinarily have clear answers.
Let’s consider the term “charitable deduction.” A perfectly good term that’s sometimes used in a misleading way. For example, a letter to a donor says that the donor can get a “charitable deduction” for giving her vacation house. What’s possibly misleading here? It’s true that the donor may get a federal income tax charitable deduction, subject to various conditions and limitations. The donor, however, may not get a state income tax charitable deduction, depending on the donor’s state of residence. So the statement about getting a charitable deduction is factually overbroad.
And, by the way, no charity “gives charitable deductions.” Charities issue gift receipts. The tax law in some situations allows one to claim a charitable deduction. Focus on the facts.
Words matter; facts matter. Muddled words create a muddled fact picture, which inhibits gift planning. Bottom line: gift planners need to be both word managers and word decoders . . . so the facts are clear. So gift planning can move forward rationally. If you need help managing words you want to communicate or decoding words communicated to you, contact a Sharpe Group consultant.
Click here for a recent piece with more info on charitable deduction traps.
by Jon Tidd
