Gifts of Complex Assets
Gifts of non-cash complex assets (including business interests)
Subject to ºÚÁϳԹÏÍø±¬ÍøÕ¾’s due diligence and its Gift Acceptance Committee’s approval, ºÚÁϳԹÏÍø±¬ÍøÕ¾ College may accept non-cash gifts of complex assets such as :
- Restricted stock
- Privately held interests
- Unique assets (patents, mineral rights, royalties)
- ºÚÁϳԹÏÍø±¬ÍøÕ¾ Innovator’s pledges
By gifting business interests prior to a liquidation event, a donor can create a significant philanthropic impact at ºÚÁϳԹÏÍø±¬ÍøÕ¾ while at the same time reduce or eliminate capital gains tax, obtain an available charitable deduction and remove assets from one’s estate, reducing estate tax liability.
While gifts of complex assets can be used to support the College immediately or in the future, upon liquidation they can also be used to fund certain gifts that provide income, such as with a charitable remainder unitrust. Liquitated gifts of business interests can also be used to fund a charitable lead trust that provides ºÚÁϳԹÏÍø±¬ÍøÕ¾ with income for a defined term of years and allows for any remainder to pass to heirs, in some cases in a tax-advantaged way.
Gift Benefits
- Donors of non-cash, complex assets will receive gift credit and an immediate income tax deduction for the appraised value of the gifted interest.
- Donors pay no capital gains tax on any appreciation of their ownership interest in the gifted business interest.
- Under certain conditions, donors may be able to use the proceeds of the liquidated asset to fund a life-income arrangement, such as a "flip" charitable remainder unitrust or, alternatively, to fund a charitable lead trust providing income for ºÚÁϳԹÏÍø±¬ÍøÕ¾ for a period of years before funds remaining in the trust fund a charitable remainder trust or pass to noncharitable beneficiaries.
Important Factors to Consider
- Tax benefits associated with a charitable gift of complex assets may include an available charitable deduction. The donor is responsible for obtaining a qualified appraisal of the value of the gifted interest which meets IRS requirements and should carefully consider when to obtain the appraisal. An appraiser may apply valuation discounts due to certain factors (lack of control, lack of marketability).
- Gift timing is an important consideration for the donor as tax benefits of a gift can be lost if the IRS determines there was a pre-arranged sale.
- The College will prepare a custom gift agreement. In most cases, the agreement will include an indemnification provision should there be expenses due to, among other things, taxes, liabilities, expenses, capital calls, for example.
- In certain circumstances, the College may ask the donor to gift the assets to a charitable intermediary to liquidate and then transfer the sum to ºÚÁϳԹÏÍø±¬ÍøÕ¾.
Explore Making a Gift of a Complex Asset
Contact the Office of Gift Planning at giftplanning@bowdoin.edu or by calling 207-725-3172 to discuss your philanthropic goals.
Please note that we are prohibited from giving legal or financial advice and none of the information above should be interpreted as such. We encourage you to consult with your own legal counsel or financial advisor before deciding whether or not to proceed with a gift.