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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3173
Experience:  IRS licensed Enrolled Agent and tax instructor
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I have a lady, age 62 who would like to make a large

Customer Question

I have a lady, age 62 who would like to make a large donation (200K) to her church from her IRA. I just has her minister call me. She makes 50k per year work income. I know she can donate the 200k, her income goes up to 250, and she deducts 125000 of the 200k this year. I know if she were 70 1/2 she could make at least some tax free charitable deduction. Is there any other way she can make a large donation and save herself more than the 125 k deduction? She had the idea she could transfer direct and avoid tax. I do not know how to do this, but thought I would double check. I know if a capital asset appreciated, she could donate the asset and not count the income. I do not think she can do this with IRA. The IRA was originally form a 401k and was formed out of tax tree dollars. What is the best tax break we can offer her?
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

The tax-free distribution from individual retirement plans (IRSs) for charitable purposes expired at the end of 2014 and haven't been extended yet. It was introduced to the congress/house in April 2015 for a renewal but no updates since then.

Unfortunately, there's no other options to transfer her IRA tax free. To reduce tax burden a little, she could split the distributions between two years instead of making one large in one year. Another option would be donation of appreciated stock or other asset instead. She could avoid capital gains and still be able to take charitable deduction.

Customer: replied 1 year ago.
OK. Is there any way she can do this with assets that appreciated in LLC? Or am I dreaming?
Customer: replied 1 year ago.
I meant assets that appreciated in IRA, not LLC.
Expert:  emc011075 replied 1 year ago.

Not in IRA. Distributions from IRA are taxed as retirement income, not as capital gains. Anything appreciated in value with after tax basis would qualify: real property, stocks, bonds, gold, art....

Expert:  emc011075 replied 1 year ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.