Case Study 

The following is an illustration of how this type of donation works.

As Jerry and his wife, Ann, both 70, updated their estate plans, they spoke with their attorney about adding a charitable gift to their plans. Newly retired, the couple was looking for ways to secure future income.


The Gift
Jerry and Ann established a $20,000 gift annuity by donating stock they purchased years ago for $5,000.

Financial Benefits
Charitable gift annuity: $20,000
Annual payout for both lifetimes: $920
   Tax-free portion: $167
   Capital gain income: $501
   Ordinary income: $252
Immediate charitable income tax deduction: $6,5761


The above taxation is in effect throughout the couple's estimated life expectancy of 20.1 years. After that, the annuity is taxed as ordinary income. As noted above, the couple will pay some capital gains tax spread out over their life expectancies. A benefit, however, is that they will eliminate an immediate payment of $2,250 in capital gains tax that would be owed if they sold the stock instead.

Question MarkQuick Tip
If you fund a charitable gift annuity by Dec. 31, you'll qualify for a tax deduction on this year's income tax return, if you itemize on your taxes.

Learn How You Can Help
To discuss the good your gift annuity could accomplish at Willamette University, please contact Lori L. Hoby at (866) 204-8102 or lhoby@willamette.edu.


1Based on annual payments and a 2.4 percent charitable midterm federal rate. Deductions vary based on income earned.