George Fox University | Office of Development | Estate and Planned Giving | I have something to give (or get out of my house), is this a good gift for me and George Fox?

I have something to give (or get out of my house), is this a good gift for me and George Fox?

Over time we seem to accumulate a lot of "things." Some of these items are very valuable and some have outlived their usefulness, and they are good items for a garage sale or a thrift shop. Some items may be very beneficial and meet a real need at George Fox.

Tangible personal property refers to anything that a person can touch or feel, other than money. It includes artworks, jewelry, coins, rare books, oriental rugs, cars, boats, aircraft, timber, and so much more. Art is a broad term that includes paintings, sculpture, watercolors, prints, drawings, ceramics, and decorative art. It may also include historical memorabilia, antique furniture, silver, and other similar objects.

Gifts of tangible personal property present special issues for the donor and the university. George Fox does not have a "thrift store" for recycling used household goods. There are other charities more suitably equipped to handle those types of donations.

More valuable items may be appropriate gifts for the university. Tangible property gifts can be given as outright gifts to benefit specific GFU programs. Recently a car was donated and placed in the university's fleet. Also, a potter's wheel matched others in the art department and enabled the department to add a work station for students. There are times when valuable pieces of art are contributed and intended to be displayed in university buildings.

Tangible items can also be used to fund a planned gift and provide income to the donors for their lifetimes. These planned gifts could include gift annuities or charitable remainder trusts. There are some special rules that may govern some of these gift plans.

Some key questions may provide guidance for tangible property gifts:
1. Is the asset being given related to the mission of George Fox University? Is the university likely to use the item in its educational programs or add it permanently to the university's art collection? Will the item be sold, and the resulting funds be used for a specific program?
Generally, tax deductions are limited for gifts of tangible personal property, unless such gifts are put to a "related use" by the organization that receives the property.

With some exceptions, if the property is put to an unrelated use (including immediate sale at auction or otherwise), then the donor is only allowed to deduct the lesser of his or her basis in the property or the current fair market value of the property.

2. Is the property held by the donor for investment purposes or held primarily for sale to customers in the ordinary course of the donor's trade or business?
When inventory property is transferred to a public charity, the donor's charitable deduction is based on the lesser of the property's fair market value and the cost of goods sold.

3. Is the donor the creator of the property?
If the gift is from the artist, the artwork is considered ordinary income property - created in the normal course of his/her trade. Under federal law, if the donor is the artist, then the donor's income tax deduction for the gift is limited to his or her cost basis - for a painting, this is the cost of the canvas, paints, and paint brushes.

However, for Oregon artists who donate their artwork to a recognized charitable organization or governmental unit there is an additional deduction. The artwork is considered a capital asset, same as if the artwork was owned by someone other than the artist. The Oregon deduction amount is the FMV of the artwork minus the actual allowable amount as an itemized deduction under federal tax law. Deductions must be itemized on the donor's Oregon tax return for this additional deduction.

Example: Susan Hernandez donates one of her sculptures with a FMV of $10,000. The cost of the materials used to create the sculpture is $600.

Also, the artist is allowed to claim this deduction even if the charitable organization is not going to retain or use the artwork - it is intended that the work will be sold to benefit the university.

4. How are tangible gifts valued?
One of the most important factual questions that arise is the value of the donated item. For the donor, establishing value is essential to determining the tax benefits of making the gift.

For tax purposes, the burden of establishing value rests upon the donor, though George Fox may assist the donor in acquiring the correct information.

The value of an asset donated to a charitable organization is determined by the asset's fair market value on the date of the gift. "Fair market value" is defined in IRS regulations as the price that a knowledgeable and willing buyer would pay for the asset to a knowledgeable and willing seller; assuming both buyer and seller have full knowledge of all facts relevant to the property's value.

For items over $250 in value a valid receipt issued before the due date of the tax return is required. If the gift includes items or property valued at more than $500 (or a group of items with a value in excess of $500), IRS Form 8283 must be completed and submitted with the donor's tax return. As a courtesy, George Fox may provide the Form 8283 to the donor, however it is the donor's responsibility to see that the form is included with his/her income tax filing.

If the value of the donated property exceeds $5,000, a qualified appraisal must also be obtained. Special rules may be applied to gifts of art contributed to George Fox University .

All gifts of tangible property are subject to the IRS regulations, as well as the policies and guidelines of George Fox University . Each prospective gift must be evaluated in terms of:

• Costs associated with acquiring the gift asset.
• Gift administration and management costs to be borne by the university.
• Related-use items must be acceptable to the university and the department that is to retain and use the items.
• Items to be sold must be evaluated in terms of marketability and the projected time to sell those items.
• The projected net return to the university must be considered prior to acceptance of the gift.

• George Fox is grateful for all tangible property gifts that further its educational program or provide significant financial value. For more information on the appraisal rules, gifts of artwork or other items of tangible property, send a note to Al Zimmerman , director of planned giving, (azimmerman@georgefox.edu) or call 503-554-2106.