get a tax deduction for the donation and non-monetary assets and promissory donations
illiquid financial assets
financial assets that are difficult to sell because of the expense, and the so-called lack of interested buyers, or for any other "liquidity reason." Examples of illiquid assets as follows: unrestricted and private equity, LLC and interests Limited Partnership and deeds and mortgages, promissory notes, and the rights of mining, including oil and gas partnerships or fees trust list, insurance, and real estate.
non-liquid assets have value, and in many cases, very high value, but it is difficult to price and sell.
lack of liquidity reduces the value of assets by a liquidity discount. All other things being equal, the more liquidity and assets, the less value it has. This was an opponent measurement and its application in the assessments illiquid assets evaluated always a challenge.
effective way to Make a charitable tax difference
Many charities welcome the contributions of illiquid assets. The donor may be an effective and efficient tax from the tender. Donors are entitled to claim a tax deduction of the fair market value-- not only on the basis of the original cost. This tax treatment offers significant benefits at the federal level, and often at the level of States and localities.
donated property key considerations
donor must obtain a qualified independent evaluation before making a contribution. The IRS requires a donor for an appraisal of eligible assets are illiquid no earlier than 60 days before the date of the gift and no later than the maturity date. It is the responsibility of donors to get ratings, and tax declarations occasion, and defend against any challenges to the claims of the tax benefits.
important tax consequences. The donor should consult a professional tax adviser. The tax benefits of gifting may be unusual (non-liquid) large - and can include the full fair market value of the assets of a discount, and avoid all capital gains tax, and the ability to move forward with discounts for six years. But the devil is in the details. It must be done properly and according to the rules of the IRS.
create a "fair market value" of the Promissory Note
"fair market value" is the price at which the property is changing hands between a buyer willing seller willing, not being under any compulsion to buy or sell, or both the existence of a reasonable amount of knowledge of the relevant facts. Trading liquid assets in active markets, it should reflect assessments observable quoted price, recent transactions, or the main issue price for similar assets.
For assets are illiquid, if you can not actual prices arise because of poor liquidity and lack of commercial activity, there is a need for an alternative approach. An assessment from a qualified appraiser should reflect "fair market values" that approximate the actual values of the sales in the hypothetical, transactions structured.
appraiser must use an experienced referee. This is the key to evaluating illiquid assets. There is no mathematical formula, the rule of thumb calculation, or the school process. It is a "process of resurrection." It requires a sound understanding of the promissory note and potential buyers.
asset valuation requires determining the appropriate rate of return for the return applies to a memorandum being evaluated. This decision is based on the individual, unique, and risk / return them. It must be a benchmark rate of return used to compare and document the current revenue and / or the historical relationship of assets comparable. This means must be evaluated experiences and understanding of experts across many disciplines, including trade and quantitative research, credit analysis, and structured finance.
conclusion
donation of illiquid assets, such as private promissory note, can be an effective tax plan.
tax cuts to donate a non-cash asset, such as a promissory note, it can be very valuable. Evil in the details; must be done properly and according to the rules of the IRS.
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