JUNE 2024 | 33 THE OKLAHOMA BAR JOURNAL charitable organization has verified that the donor’s intent can be honored, it is a best practice for the attorney to draft a legally binding gift agreement that is signed by the donor and the charitable organization that identifies the circumstances when the restrictions may be terminated. STEP BY STEP32 Property donations can prove an excellent source of revenue for charitable organizations. However, these gifts entail a higher level of administrative support to review, accept and, in most cases, ultimately liquidate. The following steps and stages in the gift process are important for the attorney to remain apprised of when counseling clients. Real Property Gifts Often Take Months, Not Minutes If the donor would like the gift to take place in a certain tax year or season, it is important to plan ahead and allow at least two to three months to complete this type of gift. There are numerous legal and tax factors to consider, and several parties are involved in these transactions. Gifts taking place near year-end may require additional time because of heightened demand on advisors’ time, holiday office closures and vacation schedules for various professionals. Of note, the property does not need to be sold by the charitable organization in the same year as the gift for the donor to receive a deduction. Risky Business: The Prudence of Property Inspections and Due Diligence Unlike many other asset types, accepting real property donations exposes the charitable organization to a level of risk. For example, if the property takes a lengthy period to sell, it may incur sizeable maintenance and insurance costs. Alternatively, there may be some sort of undiscovered liability or environmental hazard that needs to be remediated. To minimize those and other risks, in advance of accepting real property donations, some charitable organizations will require property inspections and disclosures, occasionally via the completion of a detailed information gathering form or signed affidavit. The charitable organization will often then determine whether or not to accept the gift. Qualified Appraisals for Property Worth More Than $5,000 For donors who wish to itemize and claim a charitable contribution income tax deduction, the IRS requires an independent, qualified appraisal to determine the property’s FMV.33 Timeliness is of the essence, and the appraisal must be dated no earlier than 60 days before the date of the property transfer or later than the due date of the tax return where the charitable contribution deduction is first taken or on the date of any amended tax return that first reports the charitable contribution deduction.34 The IRS takes the position that the taxpayer cannot take a charitable deduction for the appraisal expenses.35 Include the Charity’s Taxpayer/ Employer Identification Number in the Gift Language and Deeds The attorney should document the charitable organization’s taxpayer/employer identification number (EIN). The charitable organization can provide this information directly, or alternatively, it can be looked up on the IRS website or at Guidestar.org.36 Many charitable organizations share similar names or change names over time, so including the EIN in the gift language eliminates confusion when the property may be transferred well into the future. Moreover, confirming the charitable status by identifying the EIN is also a best practice as part of the attorney’s due diligence.37 Sometimes, a client or attorney mistakenly assumes a good cause is a registered charitable organization when that may not truly be the case and is therefore ineligible for a charitable contribution income tax deduction. CONCLUSION Facilitating philanthropy is just one of the many ways attorneys can uphold their obligations to render public service. Effective counsel is essential to successfully completing gifts of real property. Supporting our clients in philanthropic endeavors is one way we, as attorneys, can use our specific talents and training for the greater good. ABOUT THE AUTHOR Christa Evans Rogers is an attorney and certified fundraising executive. She lives in Tulsa with her husband and fellow attorney, Timothy Rogers. Ms. Rogers was recognized as the OU College of Law outstanding graduate for the class of 2011. Her practice centers on charitable gift planning, and she serves as the vice president of client engagement for WatersEdge. She has volunteered on the boards of the OBA YLD, the Eastern Oklahoma Chapter of the Association of Fundraising 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.
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