The recently enacted CARES Act offers broad relief for many families and employers. The bill is extremely complex. Deep into the two hundred forty-seven pages, is §2105, one provision that hasn’t been talked about very much. That is that contributions of cash to public charities made during the current calendar year (2020), will be deductible up to 100% of adjusted gross income (AGI) instead of the normal 60% of AGI limitation.
Interestingly, additions to existing, or opening of Donor Advised Funds is expressly eliminated from this benefit. The only other limitation are gifts to Supporting Organizations. That means that gifts to Private Foundations appear to be qualified for these gifts. Discussions with fellow professionals make me believe that gifts of cash to a Charitable Remainder Trust won’t qualify, though gifts in exchange for a Charitable Gift Annuity would. It is unclear whether gifts of cash to a Pooled Income Fund qualify but we’re leaning toward no.
All the balance of the charitable giving rules apply to these gifts meaning if someone gives away more than 100% of their AGI, they may carry the unused portion of the gift forward for five additional years until it is fully utilized (seemingly at the 60% limit). Further, if the same taxpayer makes gifts of other assets such as appreciated securities, in 2020, then the normal old limitations apply. Simply said, if someone is intending on giving a large cash gift this year to take advantage of this rule, don’t give anything else away this year.
While there is a lot of tension currently in the world with the Coronavirus effecting every aspect of our lives, there is also a lot of need and a lot of charities struggling to fulfill their various missions. This part of the stimulus encourages giving at the highest level.