kels417 As I understand it, any property that is considered STCG property (owned less than 12 months) that is contributed to a charity (like a stock) is deductible at cost. The IRS does not want to miss out on that higher STCG tax that you would pay if you sold the asset. If you have a stock that cost you $5 and its FMV is now $1,000 and you are in a high tax bracket, STCG tax can be at 35% (in 2013). They want that money and they want you to sell it – not contribute it and deduct 30% (of AGI)!!
As far as long therm. One way to think of charitable contributions (for me) is to think of the continuation of the transaction. If I bought a house 5 years ago for $500,000 and it is now only worth $30,000 and I decide to contribute it to a charity – how much can the charity sell that house for to collect funds to run their organization? $500,000 or $30,000?
How much do you think the IRS will let me deduct from paying my taxes (disregarding multiple issues like the Itemized Deduction phase outs) assuming my income is high enough to handle any deduction limitation)? 30% x $500,000 or 30% x $30,000?
FAR Aug 2012 79
AUD Oct 2012 84
REG Aug 2013 87
BEC Jan 2013 80
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