Episode 44. Year End Charitable Donation Tax Strategies

Interested in Tax Strategy for your Business? Send us a message with your email address and we’ll help you get started!

In this year-end tax planning podcast, I cover two powerful charitable donation tax strategies that wealthy individuals use to reduce their tax liability by hundreds of thousands of dollars. If you're facing a big tax bill this year or want to implement proactive tax planning strategies before December 31st, this podcast tells you exactly how to use charitable donation strategies.

First, let's talk about the Donor Advised Fund (DAF) strategy. Forget the noise about opening your own foundation or nonprofit - I'll show you the SIMPLE way to get massive tax deductions. A Donor Advised Fund is like a bank account specifically for charitable donations that you control. Every dollar you put in can become a tax deduction on your personal tax return, and you decide how the money gets invested while it grows tax-free. Cash contributions are limited to 60% of your adjusted gross income, but that's still massive tax savings. Plus, with the new tax law, you can now deduct $1,000 if you're a single filer and $2,000 if you're married filing joint, even if you don't itemize.

The second tax strategy is appreciated stock donations, and this is where it gets really interesting. Why sell your winning stocks and pay capital gains tax when you can donate them instead? I break down how donating appreciated stocks, crypto like Bitcoin and Ethereum, or even artwork can get you a full fair market value deduction WITHOUT paying any capital gains tax. This is exactly how some wealthy individuals donate artwork - they buy art, get it appraised, and donate it for a tax deduction. The same tax strategy can potentially apply to Bitcoin, Ethereum, and any appreciated asset you've held over 12 months.

These donation tax deductions require itemizing on your tax return, so work with a qualified tax advisor to maximize your year-end tax strategies and ensure compliance with IRS regulations. If you need a year-end tax strategy, Donor Advised Funds combined with appreciated stock donations are the way to go. Just make sure you're not trying to be your own donor or opening foundations without a real purpose - that's when you can run into IRS issues. 

I've put together this FREE resource for you:

7 Write-Offs Every S-Corporation Business Owner MUST Know
🆓 Download FREE PDF here: https://7taxwriteoffs.com/?el=podcast&htrafficsource=buzzsprout

Ready to start saving money on your taxes?
☎️ Schedule your FREE Tax Advisory Session: https://taxplanningcall.com/?el=podcast&htrafficsource=buzzsprout

💸 Save 100k NOW 💸 - https://save100know.com/access-training?el=podcast&htrafficsource=buzzsprout

🤑 If you want a better payroll app to process and file payroll for your business. Check out Gusto, so easy to use and you get a $100 gift card for signing up using this link: https://gusto.com/r/boris466

P.S. When you sign up for Gusto, you get a $100 Visa gift card

*Disclaimer This material & presentation content is for informational and educational purposes only. This material and presentation content is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this ...

Episode Transcript

SPEAKER_01 (00:00):
Hey and welcome today.
I want to talk to you about twoyear-end donation tax
strategies.
Okay, so if you are a charitableperson, or if you're not a
charitable person and you wantto learn about the donation tax
strategies, then this is foryou.
Alright, so what are those twoyear-end tax planning donation
tax strategies?

(00:20):
So we're gonna talk about donoradvised funds.
Okay, so believe me, if anybodytells you that you need to open
up your own foundation or yourown nonprofit account so that
you can put money away into itto reduce down your tax
liability, forget all the noise.
I'm gonna super simplify it foryou and explain to you what is a

(00:41):
donor advised fund.
Another one of my year-end taxplanning strategies that we
discuss with our clients a lotis appreciated stock donation.
So we're gonna get into that aswell.
What does that look like?
What is an appreciated stock?
And really, a lot of wealthypeople actually use this
strategy with artwork, and Iwill explain that to you what

(01:04):
that looks like.
But uh, let's get started.

SPEAKER_00 (01:06):
Welcome to the tax reduction podcast for
money-making entrepreneurs withBoris Musheev.
Boris has helped entrepreneursacross the United States
collectively save millions ofdollars in taxes with the power
of tax planning and advisory.
The only way you, the businessowner, can save money on taxes
is by using proactive taxstrategies.
And this podcast is all aboutsaving you money on taxes.

(01:30):
Boris will share with youin-depth and easy-to-understand
tax reduction strategies thatyou can implement in your
business within 30 days or less.
Let's jump into today's episode.

SPEAKER_01 (01:40):
Let's first talk about the donor advice fund.
So it is also referred to as DAFD-A-F, Donor Advised Fund.
Now, what is a donor advicefund?
Believe it or not, it is such asimple bank account.
Okay, it's a bank accountspecifically designed or
designated, I should say, forcharitable donations.
So it is your bank account.

(02:01):
It is as easy as opening up abank account.
A lot of uh financialinstitutions can help you open
it, or you can open up uh yourown, literally, you don't need
their help, but it's a bankaccount that you open.
Any money that you put into thisbank account that you now own
that is designated designatedfor charitable purposes is is is

(02:22):
a tax deduction.
Ooh, I got a mouthful there.
Sorry.
It's a tax deduction on yourpersonal taxes, okay?
So you've got a big taxliability, let's say you've got
a million dollar profit.
And by the way, if you are abusiness owner that is already
making a million dollars ormore, you're not working with a
tax advisor, you got to getyourself a tax advisor.
Because the only way that youcan save money on taxes is

(02:43):
really having a tax advisorbecause you need proactive tax
planning strategies and donationtax strategies that can
literally reduce your taxliability by a lot.
So, back to our donor advisedfund.
So you've got a bank accountthat you opened up and you've
got a million dollar net profitat the end of the year.
You're like, I want to reducethis uh net profit, and you have

(03:04):
in mind that you want to make adonation in the future years.
Let's say there is anorganization, you're not ready
yet to give them money, but youwant to.
But you're gonna give them moneynext year or a year after, and
you're thinking, How do I howcan I take a deduction for that?
Well, what happens is that youjust transfer the money from
your account to a donor advisedfund, which is also your

(03:25):
account, and now you get ahundred percent tax deduction.
Okay, so again, now the money issitting in a donor advice fund.
By the way, you have a controlof how that money can get
invested or reinvested.
So, depending on what financialinstitution you work with, your
money in a donor advice fund canget invested.
It can make it can earn money,which again will be tax free.

(03:50):
If you put in 100,000 there andit earned 10% and now it became
$110,000, nobody pays tax onthis.
And now you can take that$110,000 and you can donate it.
That's what donor advised fundis.
Now you also have to be awarethat your cash contributions are
limited to 60% of your adjustedgross income.

(04:10):
So let's use the same example.
You've got a million dollars intaxable income.
Okay, you can donate up to$600,000 and get a deduction.
If you donate$800,000, the$200,000 will not be allowed
this year, but it will becarried forward to the future
year.
So if you're that charitable,amazing.
Okay, all of these taxdeductions for the donation go

(04:33):
on your itemized tax return.
Here's the kicker with a bigbeautiful bill, the one what is
it called?
The OBB, the one, the what isit, the one big beautiful bill?
Okay, they've actually broughtback the donation.
When I say brought back, it'slike a kind of re-rextension or
uh from what they had during theCOVID.
Uh, when they passed the law,the Tax Cuts and Jobs Act, I

(04:56):
think it was part of the TaxCuts and Jobs Act.
But basically, what happened isthat you are now able to deduct
a thousand dollars if you're asingle filer and two thousand
dollars if you're married filingjoint without even itemizing
your taxes.
So it is for those that don'twant to open up a donor advice
fund.
But if you're that person thatyou need a year and tax
strategy, donor advice fundbeats your personal foundation

(05:19):
or your personal nonprofit.
Why do I say that?
Because a lot of business ownerscome to me and like Boris, I
want to open up a personalnonprofit.
I'm like, okay, why do you wantto do that?
So I can save money on taxes.
Okay, do you have a mission forit?
Do you have a purpose for it?
Are you gonna collect money fromthe outsiders?
Um, no, I just want to have myown nonprofit because I believe
in a certain thing, let's say,whatever that may be, right?

(05:40):
Giving money to the homeless orwhatever that is.
Okay, perfect.
So you're gonna put money ininto that, yes.
You will be your own donor, yes.
And will you be donating thatmuch money, which is a hundred
or two hundred thousand dollars,distribute out in the
organization that you build uhbelieve, right?
Believe.
And look, yeah, I guess I don'tknow.

(06:00):
I'm I'm not sure, but I want toget a tax deduction.
Then then look, you don't needthat headache because if you are
gonna open up your own nonprofitand you will be your only donor,
you could potentially haveissues with the IRS.
Or if you open up your ownfoundation and you are your only
donor, you will also potentiallyhave issues with the IRS because
you've got to have a purposewhen you open up these
nonprofits.

(06:21):
But if you want to do it for thesake of tax strategy and for the
sake of tax write-off, you canopen up a donor advised fund.
You open up a donor advisedfund, the money that you put in,
it's your own bank account.
When you're ready to make thatdonation from the donor advice
fund, you will make thatdonation from the donor advice
fund.
All right, I hope this was superhelpful.
Now I want to talk to you aboutan appreciated stock, and we'll

(06:45):
be right back after this break.

SPEAKER_00 (06:47):
If you have a tax preparer and you do not have a
tax advisor, the only way youcan save money on taxes is by
using proactive tax planningstrategies that only a tax
advisor can give you.
Bora's put together a free PDFfor you, the business owner.
Seven tax write-offs every SCorporation business owner must
know.
In this PDF, you can find seventax strategies that you can

(07:10):
start using in your business toinstantly start saving money on
taxes.
Click on the link in thedescription below for a free
download.

SPEAKER_01 (07:18):
Okay, awesome.
Let's talk about appreciatedstock.
Another one of my favoriteyear-end tax strategies.
So let's imagine this for asecond, okay?
So I'm gonna give you an exampleso that you can follow me
through.
I'm I'm guessing you invest in astock market.
I got a lot of business ownersthat invest in a stock market.
So let's assume you do, okay?
Even if you don't, let's assumeyou do.
Let's say you buy a stock, anApple stock, for$100, even

(07:41):
though I don't think it's ahundred dollars today, like it's
like way more than that, okay?
But let's just assume it's ahundred dollars.
You hold a stock for a whole 12month for more than a year, so
now it becomes a long-terminvestment, right?
Because you held it for morethan 12 months, it is now a
long-term investment.
So if the stock goes up to let'ssay$300, okay, so$100 to a$300,

(08:03):
right?
It increased in value from$100to$300.
Now you have two options.
You're gonna sell the stockright now, and you're gonna
realize a$200 capital gain,because it's a long-term capital
gain, and you're gonna pay taxon the$200.
You're like, wait, I don't wantto pay tax on it.
Let me just donate this money.
And you donate the money, so youpick up the income and you don't

(08:23):
make a donation, you now have awash, so you don't pay tax on
this income.
All right, that makes sense.
Like, what was the purpose of meusing this strategy then?
Okay, so the second option thatyou can actually do, you uh
basically asset tax strategy,you can take the same stock, so
you invest in Apple,$100.
Okay, 12 months later, the valueof the stock goes up to$300.

(08:46):
What you can do instead, insteadof selling it and picking it up
as an income, you can take thatsame stock, the same security
that you have, and donate it toa nonprofit organization.
Now, why would you want to dothat?
Because what happens is that youdon't pick up$200 as an income
and you get a deduction for thefair market value.
Again, you bought it for$100,but you're taking a deduction

(09:09):
for$300 because the stock hasincreased in value.
Now, if you have a nonprofitorganization that you support a
lot, I will not be surprised ifyou ask them, Do you accept
stocks and donations?
And they will say, Yes, we do,because most of the nonprofit
organizations are set up in away to be able to accept those

(09:30):
donations.
Okay, to accept the donations ofstocks.
Why?
Because people use it as a taxstrategy, especially towards
year end, nonprofitorganizations get very, very
busy receiving donations ofappreciated stock.
Why?
Because again, you can buy it atone value, right?
Let's say$100, it goes up to$30012 months later.
Instead of you donating your owncash of$300 or selling a stock,

(09:54):
pick a stock, picking it up asan income, forget all of that.
You just take that stock andtransfer it to a nonprofit, you
get a donation at the fairmarket value of that stock.
By the way, same is true withcryptocurrencies such as Bitcoin
or Ethereum Ethereum, right?
Whatever Bitcoin, uh whatevercryptocurrency that you have,
you can do the exact same thingwith that cryptocurrency.

(10:16):
Now, I think at the beginning Ialso told you a little bit about
how rich people do it with art.
They pretty much follow theexact same model.
They buy art, right?
I've read articles about it, bythe way.
Uh, so they buy art at a certainvalue, let's say$10,000, they
wait a year or a little bitlonger, they get it appraised,
and remember, the appraisal ofan artwork can be subjective,

(10:37):
okay?
So they buy it for$10, appraiseit for$30, or whatever that may
be, and then they donate an artthat is worth$30,000, excuse me,
that they bought for$10,000 thatis now worth$30,000 and get a
$30,000 donation deduction.
The same strategy applies tostocks, okay?
So, ladies and gentlemen, thatis it for you.

(10:58):
Here's your uh year-end taxplanning strategies.
Now, if you are a client ofBoris M tax, so if you are a
client and we're doing your taxadvisory and we're kicking ass,
reducing your taxes, and youthink that this strategy could
be applicable to you, pleasemake sure to contact your tax
advisor at my firm.
You know who your tax advisoris.
We'll make sure we areimplementing this tax strategy

(11:20):
for you if it is somethingyou're interested in.
And if you're not a BM taxadvisor client, I recommend you
schedule a free tax strategy.
The link is below.
Thanks so much.

SPEAKER_00 (11:30):
That's it for today's episode.
Be sure to check out thedescription below for some free
tax reduction resources thatBoris put together for you.
If you're ready to work with atax advisor on your tax
planning, be sure to scheduleyour call by heading over to
www.taxplanningcall.com.
That's www.taxplanningcall.com.
And be sure to subscribe to ourpodcast to be notified when the

(11:52):
next strategy is released.