Being a Wisconsin native and as a 'walk-on' to the University of Wisconsin, it was a privilege to graduate in pharmacy and play Big Ten basketball in the 1950s. Our contribution to University Athletics, the Athletic Training Education Program and the sports medicine facilities is very important to me.

Curt Mueller (’57 BS Pharm)

Gifts of Assets

The simplest way to support the UW-Madison is through cash gifts. But creative gifts of assets can include stocks, bonds, and property (real estate and personal property such as artwork). These cannot only provide you with charitable deductions, but often offer additional tax savings.

Cash

Gifts of cash are the most common form of contribution to the University. A gift of cash is easy to do, and the gift is not subject to gift or estate taxation. A contribution that you postmark in December is deductible for that tax year even if the Foundation receives it in January — provided the account against which the check was written had sufficient funds to cover it in December.

A cash gift entitles you to a charitable deduction of up to 50 percent of adjusted gross income. If all deductible gifts in a year exceed the 50 percent limit, you may carry the excess amount over as a deduction for up to five years.

For example, Edna Smith has an adjusted gross income of $50,000 this year. She contributes $35,000 to the UW Foundation. She may deduct $25,000 this year and carry forward $10,000 to deduct next year.

Gifts of Appreciated Securities and Other Assets

Appreciated stocks and bonds are the second most popular asset donated to the Foundation. That's because they're simple gifts and can offer you a greater tax benefit than an equivalent in cash.

Using appreciated assets entitles you to a charitable deduction for the fair-market value of the donated asset, and you can avoid paying capital-gain tax you would otherwise pay upon the sale of the appreciated securities. This tax deduction may be up to 30 percent of your adjusted gross income, and any amount over this limit may be carried forward for five years.

For example, Bob Cash and Betty Goodstock decide to donate to the Foundation. Mr. Cash made his gift in cash by sending a $10,000 check. Because he submits itemized tax returns and is in the 28 percent tax bracket, Mr. Cash can look forward to saving $2,800 in taxes. In other words, his gift to charity will cost him only $7,200.

By contrast, Betty Goodstock invested $5,000 in a hot stock that has grown to a value of $10,000 in 16 months. When she made a direct gift of her shares of stock to charity, she entirely bypassed the capital-gain tax. Mrs. Goodstock receives an income-tax deduction for a gift of $10,000, which saves her $2,800 in taxes. (She, too, is in the 28 percent tax bracket.) In addition, she also has saved $750 in capital-gain tax, since her $5,000 profit from her appreciated stock would have been taxed at a 15 percent rate. It only cost Betty $6,450 to make her $10,000 donation.


For further information about gifting securities, please contact Bridget Bush, senior accountant, or Jennifer L. Kidon DeKrey, controller.

Real Estate

The rules about giving real estate are essentially the same as for gifts of securities. Almost any type of real estate may be donated: undeveloped land, farms, commercial buildings, vacation homes or your residence.

You receive a charitable deduction for the full fair-market value of the unencumbered real estate. You may apply the deduction up to 30 percent of your AGI in the year of the gift with the five-year carry-over provision. You avoid capital-gain tax on the appreciation you have in the property and there are no gift taxes. Because you have removed the property from your estate, you also have reduced your estate taxes.

A donor who wants to recover a portion of the value of the property that he or she wishes to contribute to the Foundation may consider entering into a bargain sale transaction. In effect, a bargain sale is a sale of property to charity for less than its fair-market value. The bargain sale price must be any amount mutually acceptable to the charity and the donor.

For example, John Miller, 78, owns a vacation home he no longer uses. He bought the home for $40,000 some years ago, and it is now worth $120,000. He offers to sell it to the UW Foundation for $40,000. As a result, he receives $40,000 from the Foundation and can deduct the contributed portion of $80,000 for income-tax purposes. John also must report a capital gain of $26,667. (The reportable capital gain is arrived by dividing the sale price of $40,000 by the fair-market value of the property - $120,000 - and multiplying the result by the gain - $80,000.)

Tangible Personal Property

Everyone has tangible personal property of some value: works of art, antiques, jewelry, rare books or other collections (such as coins or cars, for example). To give such items to the Foundation, you must have held them for more than a year. There are two types of tangible personal property — items related to the University's purpose and items not related.

If you make a gift of a related-use item, you receive an income tax charitable deduction of the appraised value of the gift on the date of the gift (up to 30 percent of your adjusted gross income with the five-year carry-over provision). Gifts of unrelated items only allow you a deduction of the item's cost basis.