Kea Posted January 5, 2008 Report Share Posted January 5, 2008 A client called today to say she wanted to donate land to a church. She owns 7 acres and has been renting out. She is considering: selling it to them at a discount selling outright and donating proceeds or donating a subsection of it. The shocking part is that she is asking me before taking action! My instinct is to advise her to sell the land and pay tax at the max 15% capital gain (all land so no depreciation) then donate the cash and take the Sch A deduction. At that point, she can decide exactly how much she wants to donate. Since it has been rented I don't think I can use the strategy for donating appreciated assets (and avoiding the capital gain tax). Are there other options that my pre-tax season brain is not thinking of? Thanks. Quote Link to comment Share on other sites More sharing options...
Jake Posted January 5, 2008 Report Share Posted January 5, 2008 "Since it has been rented I don't think I can use the strategy for donating appreciated assets (and avoiding the capital gain tax)." Why not? Quote Link to comment Share on other sites More sharing options...
Kea Posted January 5, 2008 Author Report Share Posted January 5, 2008 "Since it has been rented I don't think I can use the strategy for donating appreciated assets (and avoiding the capital gain tax)." Why not? Don't I have to show a sale of business property? Would I show it as sold for $0? Take a capital loss and charity deduction? Sounds like double dipping. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted January 7, 2008 Report Share Posted January 7, 2008 Even tho it STARTS on the 4797, it then goes to the Sch D, if it has been held over a year, Kea. Quote Link to comment Share on other sites More sharing options...
jainen Posted January 7, 2008 Report Share Posted January 7, 2008 >>it STARTS on the 4797, it then goes to the Sch D<< She can donate it directly and take the FMV on Schedule A. She needs an appraisal because it is more than $5000. Fortunately there is no depreciation to recapture or other "ordinary income" to mess this up. If she wants some money for it, she can do a bargain sale that will still avoid some percentage of the capital gains tax. There are many other ways to set it up so she can receive some money. She can retain a life estate and continue to receive the rental income. Or she can put the property in a Charitable Remainder Trust with a similar result. Most churches have a lawyer or accountant who can advise her about her specific options. Quote Link to comment Share on other sites More sharing options...
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