You may wish to make a current gift of all or a fractional interest in a personal residence, a vacation home, undeveloped land, or a commercial property. Such gifts will entitle you to a federal income tax deduction equal to the fair market value of the property on the date of your gift, provided you have owned the property for more than one year, and will permit you to avoid capital gains tax on the transfer.
A Remainder Interest in a Personal Residence
If you own a primary residence, a second home, or a farm and do not wish to dispose of such property in your estate, but do wish to continue to use the property, then you may give the International Independent Showmen’s Museum a remainder interest in that property. This type of gift:
- Allows you to remain in your home for your lifetime.
- Causes the property to pass automatically at your death to the International Independent Showmen’s Museum.
- Generates a current income tax deduction equal to the value of the International Independent Showmen’s Museum’s remainder interest calculated by subtracting the present value of your retained life estate from the fair market value of the property.
If the International Independent Showmen’s Museum can and is expected to use your gift of property (such as exhibit, or carnival or circus collection) toward the furtherance of its educational mission, and you have owned the property for more than one year, you will be eligible for a fair market value income tax deduction without having to recognize the capital gain on any appreciation.
If the property is not of a type the museum can use, or your intention is that the museum will sell the property and use the proceeds, then your charitable contribution deduction is limited to the lesser of your cost basis or fair market value.
Closely Held Stock
A gift of closely held stock may enable you to make a more significant gift than you otherwise could, will generate an income tax deduction equal to the fair market value of the stock on the date of transfer (provided you have held the stock for more than one year), and will not be recognized as capital gain. So long as there is no binding obligation on the International Independent Showmen’s Museum to accept any subsequent purchase offers, nor any specified price at which it must sell, the International Independent Showmen’s Museum may entertain offers from family members or the corporation issuing the stock to purchase the transferred shares.