Benefits

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Benefits to the donor of a gift of personal property

A gift of tangible personal property, either during your lifetime or as a bequest, can offer certain tax benefits (tangible personal property is subject to estate tax). All gifts of tangible personal property must be reviewed and approved by the Norwich University Development and Alumni Relations Office before final acceptance.

To determine the tax benefits of a gift of tangible personal property you must first determine the fair market value of the gift. The IRS defines fair market value as “the price that [the gift] would sell for on the open market. It is the price that would be agreed upon between a willing buyer and a willing seller, with neither being required to act and both having reasonable knowledge of the relevant facts.”

How much you may deduct will be based on the fair market value of the gift. If the fair market value is $5,000 or less, an appraisal is not required when you claim the deduction. Generally, if the claimed deduction for your gift is more than $5,000, the IRS suggests “you must get a qualified appraisal made by a qualified appraiser and you must attach an appraisal summary for your tax return” (Form 8283). The requirements for a qualified appraisal are outlined in IRS publication 561, “Determining the Value of Donated Property: Appraisals.” According to IRS regulations, the staff of Norwich University may not serve as a “qualified appraiser” for a gift with a fair market value in excess of $5,000. The staff can offer recommendations for qualified appraisers, if needed.

Gifts of tangible personal property held by the donor for longer than one year and which are related to Norwich University's tax-exempt purpose generally produce a deduction equal to the fair market value of the property. The assumption is that the gift will be used by the institution in accordance with its exempt function. The fair market value of the gift is deductible in a given tax year up to 30% of the donor's adjusted gross income and any excess of the limit can be carried over for the next five years (See IRS Publication 526, Charitable Contributions).

How your gift to the University is recognized

All gifts of tangible personal property accepted by the University will be acknowledged with a letter from the Development and Alumni Relations Office. In some cases, the University will issue a deed of gift to be signed by both the donor and the University. In addition, when a donor provides Norwich University with either a qualified appraisal or a copy of the tax statement which places a value on the gift and lists the donor’s charitable deduction, the amount of the appraisal or the charitable deduction will be added to the donor’s lifetime giving to Norwich University and will be acknowledged by the appropriate gift society. The Norwich University Development and Alumni Relations Office will then provide a gift receipt stating the value of your gift for tax purposes. In the case of a bequest, the donor is encouraged to share that part of his or her will, specifying the nature of the bequest, with the University.

Videotapes, unless they are related to curriculum or are given for resale, are not accepted as gifts. Gifts of books to the library, manuscripts, photographs and other archival and historical materials, are governed by other policies.

Benefits of making a gift of appreciated assets

If you hold an asset that has appreciated in value, it can be an excellent vehicle for making a gift because you will receive a two-fold tax benefit.

If you sell the appreciated asset, you will become liable for a capital gains tax on the difference between what you paid for the asset and its current value, even if you donate the proceeds.

By contributing an appreciated asset to Norwich, you are no longer subject to a capital gains tax and can take a deduction for the current fair market value of the asset. The limit on deductibility for gifts of appreciated property in any tax year is 30% of your adjusted gross income, but any excess is deductible over the next five years.

Examples of appreciated assets include works of fine art, rare books, real estate and securities.

For more information on gifts of tangible property, please contact Priscilla Gilbert, Director of Planned Giving, at 802.485.2301 or email pgilbert@norwich.edu.