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Tax Information

The New Tax Law, A Summary.

Income Taxes

A charitable gift to Amherst qualifies for a federal income tax deduction if you itemize on your tax return. (State laws vary, so check your own state law.)

There are limits to how much a donor can deduct each year:

  • 50% of adjusted gross income for gifts of cash
  • 30% of adjusted gross income for gifts of appreciated securities

There is a five-year carry over for amounts not able to be fully deducted in the year of the gift.

Capital Gains

Capital Gain is the growth (or appreciation) in value of an asset. The value of an asset at the time it is sold, minus the cost of the asset (cost basis) equals the capital gain.

  • Long Term Gain is gain on an asset at least a year and a day.
  • Short Term Gain is gain on an asset held one year or less and is taxed as ordinary income.

Gifts to Amherst: A charitable gift to Amherst of appreciated assets held long-term avoids capital gain tax. (If the donor sells the asset, he or she pays tax on the gain. If the asset is given to charity, neither the donor nor the charity pays tax on the gain.) The donor's tax deduction is based on the full market value of the asset on the date of gift. Following are the kinds of assets that can be used to make a gift:

  • Stocks and bonds
  • Mutual funds
  • Tangible property (e.g. art)
  • Real estate

Tax Deductions on Property Such as Artwork

As with gifts of appreciated securities held long term (longer than 12 months), a donor of property held long term and accepted by the College is potentially entitled to claim an immediate income-tax charitable deduction and avoid capital gains taxes. The extent of the allowable income-tax deduction for such a gift, however, would depend on whether the College is able to use the property in a manner related to its tax-exempt mission.

If the use of the contributed property is related to Amherst College's exempt purposes (which are quite diverse and varied), the donor is generally entitled to claim an income-tax charitable deduction for the full fair market value of the property (up to 30% of AGI with a five-year carryover). If the use of the contributed property is unrelated to the College''s exempt purposes, or if the donor held the property for 12 months or less before making the donation, then the donor's income-tax charitable deduction is limited to the cost basis in the property.

Estate, Gift, and Generation Skipping Tax

The estate, gift, and generation-skipping transfer tax rates are now unified, and are 40% on amounts over $5,000,000 (indexed to inflation). There is portability between spouses, where the second spouse may use the first spouse’s unused estate tax exemption.

Gift Records to Keep on File
For gifts over $250 – gift receipt.
For life income gifts – gift agreement, letter from treasurer with deduction amount, form 8283 to be filed w/tax return.
For gifts of tangible assets like books, paintings valued over $5,000 - qualified appraisal and IRS form 8283 completed by appraiser.

Information contained in this website should not be considered legal, accounting, or other professional advice. Individuals considering a planned gift to Amherst should consult with their financial advisor.
For more information about making a planned gift to Amherst, please contact the Gift Planning staff.

 

Contact Us

annualfund@amherst.edu
Main Phone: (413) 542-5900
Gift Hotline: (866) 542-GIFT

Advancement
Amherst College
P.O. Box 5000
Amherst, MA 01002-5000

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