THE OKLAHOMA BAR JOURNAL 30 | JUNE 2024 Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff. lifetime but would prefer to make a current gift of the remainder interest in the property after their passing in order to receive an immediate tax benefit. Donors fear they may outlive their savings and wish to postpone a donation of property at their passing when they know with certainty they will not need resource access. Donors hold real property they desire to sell, but that has appreciated, and they face undesirable tax consequences associated with long-term capital gains. Donors wish to receive a charitable tax deduction for the gift of property. Donors with significant assets face estate taxes and wish to reduce the size of their taxable estate.12 KEY FACTORS FOR FACILITATING GIFTS OF REAL PROPERTY Real property gifts are generally deemed one of the more complex asset classes to donate. Many charitable gifts are relatively elementary and virtually instantaneous transactions. In contrast, gifts of real property entail many nuances and include a series of steps required by both the IRS and the internal gift acceptance policy of the charitable organization or community foundation. The following considerations are crucial to keep in mind when counseling clients and engaging with the other individuals or organizations involved: Property Gifts Come in All Shapes and Sizes Virtually all real property types are eligible for tax-advantaged giving, though not all types are eligible for each charitable giving arrangement. Examples of real property interests eligible for donation include primary residences, rental properties, investment properties, vacation homes, agricultural properties, commercial properties, raw land or undeveloped properties and mineral or leasehold interests. Thanks, but No Thanks Certain property types will often be refused as noncompliant with the charitable organization’s gift acceptance policy. Commonly rejected property interests include cemetery plots, timeshare interests, gifts with stringent restrictions on use, debt-encumbered property and properties deemed unmarketable or hazardous. The Earlier, the Better! It is of paramount importance to consult the beneficiary charitable organization or community foundation as early as possible in the process. When making a gift of property that has appreciated, the best practice is to engage in advance of even discussing the sale of the property with a potentially interested buyer and especially before formally listing the property for sale. If it is deemed by the IRS that there was a “buyer in the wings,” the IRS may assert the anticipatory assignment of income doctrine, and the client may risk eligibility for the maximum tax benefits possible.13 All is not lost if a buyer has already been confirmed or if the client has sold the property in advance but desires to still make a gift. However, while there are still advantages to gifting the proceeds from a sale of real property after the fact, in most cases, they pale in comparison to the tax benefits associated with gifting the asset first. Certain property types will often be refused as noncompliant with the charitable organization’s gift acceptance policy. Commonly rejected property interests include cemetery plots, timeshare interests, gifts with stringent restrictions on use, debt-encumbered property and properties deemed unmarketable or hazardous.
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