Fundamentally, there are two types of charitable gifts. Timing of the transfer of rights to enjoyment of the property distinguishes these two types. Property ownership represents control of a "bundle of rights." A bundle of rights typically may be fragmented. Some rights may be surrendered and other rights retained. A donor may surrender rights temporarily or irrevocably. Rights may be retained temporarily or forever.
Outright gifts occur when the donor transfers, in a single transaction, his entire bundle of rights in specified property to a qualified charitable organization. These transactions are also known as current gifts. Transfer of the entire bundle of rights occurs within the same taxable year. Both the charity and the donor receive their full benefit from the transaction in that year. The transaction typically must be irrevocable in order for the donor to receive a tax deduction for the gift.
Cash, marketable securities, real estate, and bargain sales are examples of the most common types of outright gifts.
©2008 Ronnie C. McClure, PhD, CPA