George Thanos, a devoted supporter of charity_name, owns vacant land in an area under rapid development that he purchased years ago for $15,000. The land was recently appraised at $250,000. George would like to make a major contribution, but he is planning improvements to his home, and he needs about $50,000 to finance his project.

George is thrilled to learn that a bargain sale arrangement will allow him to make the contribution he envisions and get the cash he needs to complete his home improvement project. He’s also pleased with his $200,000 income tax charitable deduction, which will create tax savings in the year of his gift that more than offset the capital gains tax he’ll need to pay. This example assumes George is able to itemize his income tax charitable deduction.

Facts 
Value of land$250,000
Cost of land$15,000
Capital gain$235,000
Sale price$50,000 

 

Benefits 
Income tax deduction$200,000
Capital gain to report$47,000
Capital gain avoided$188,000
  
Income tax saved at 37% rate* $74,000
Capital gain tax at 20% rate- $9,400
Net tax savings  $64,600
  
Cash to George+ $50,000
Total benefit to George $114,600

*Assumes 37% rate and that George itemizes his income tax charitable deductions.

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