Gift Annuity Deductions

[bunchyback]

Do I enter full amount of charitable gift annuity given  ...or the portion  that  the charity figures as deductible part ?

[BarbaraW22 · Accepted solution]

No, you would not be able to claim a deduction for the full amount given for a charitable gift annuity. This is because a portion of the charitable gift annuity is actually an investment for the donor, who will receive a fixed payout for the rest of his or her life. 

Therefore, as the donor of a charitable gift annuity, you are only eligible for a partial charitable tax deduction. The deduction is calculated by taking the full gift amount and subtracting the present value of all the annuity payments. This calculation is usually done by the charitable organization, an agent of the organization or a financial investment company. 

Please see this link for additional information.

[bob53]

How do I enter first year of charitable gift annuity of appreciated stock where part is a portion is a charitable deduction in 2019? When I enter it through charitable deduction side 8283 does not appear correct since it does not show complete amount of gift to the charity.

[BarbaraW22]

When you gift through a charitable gift annuity, you can only claim a charitable deduction in the year you made the gift. Therefore, I am not sure what you mean by "How do I enter the first year of a charitable gift annuity of appreciated stock?" There would only be one year that you would be able to take a deduction.

The amount reported as a deduction on your Form 8283 should not be the full amount of the appreciated stock you gave to the charity. This is because, with a charitable gift annuity, you also receive a benefit in the form of a fixed payout for the rest of your life. Ordinary, when you give appreciated stock to charity, you would receive a deduction of the fair market value of the stock. However, since you gave the stock as a charitable annuity, your deduction is calculated by taking the full amount of your gift and subtracting the present value of all the payments you’re expected to receive during your lifetime. The amount of your deduction is usually provided by the charitable organization or its agent. This is the amount that should be reported on Form 8283 as a charitable deduction. 

Later, when you start receiving the annuity payments, you will receive a 1099-R from the charitable organization that provides the amount you received for the year. These payments must be reported on your tax return every year and are considered taxable income.

[bz1111]

BarbaraW22.  Thank you for your answer.  How do you navigate with Step by Step on TurboTax Home & Business to enter the appropriate information on the donation of appreciated stocks to charitable gift annuity?  I navigates to add another donation, entered the date of donation, entered publicly traded stock for category of donation, description and value of the stock, entered purchase price and date of acquisition, got stuck on Charity's Use of Item (answering either yes or no to the question "Will your donation be used in direct association with the charity's function?" just takes me back to listing the full value of donation being the value of the stock.  Also, besides reporting the correct reportable charitable deduction, how do you enter the reportable capital gain that the charity organization has calculated?  Thanks

[DaveF1006]

Please review this link  especially the paragraph entitled Appreciated Property. This link does a very good job of explaining your options in regard to the donated stock. As far as capital gains that the charity has calculated, that is not reported by you because there is no stock sale. Once they own the shares you donated, they would be responsible for reporting capital gains or losses since they now own the stock.