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Inside This Issue

Kay Dixon: A Lifetime of Serving, A Legacy of Giving
Assisting Parents with Gift Annuities
Cash in Valuable Collectibles, Tax Free
Grow Your Retirement Nest Egg with a Gift
A Tax-Wise Way to Retire from Being a Landlord


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The American Red Cross, a humanitarian organization led by volunteers and guided by its Congressional Charter and the Fundamental Principles of the International Red Cross Movement, will provide relief to victims of disaster and help prevent, prepare for and respond to emergencies.


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A Tax-Wise Way to Retire from Being a Landlord

Landlord

Frank is 59 and owns an apartment building worth $600,000 that he purchased many years ago for $200,000.  Depreciation deductions have reduced his basis down to only $20,000.

“I’m tired of dealing with tenants,” Frank said to his attorney. “It’s time I cashed in and took life a bit easier.”  But capital gains taxes would take $105,000 of his profit if he were to sell outright, his attorney pointed out.

Knowing of Frank’s longtime service as a Red Cross volunteer and contributor, his attorney suggested a different plan:

Frank will transfer the apartment to a trust that will pay him a 6% income for the rest of his life.  The $105,000 capital gains tax won’t come due when the trustee sells and reinvests, so Frank will begin receiving trust income based on the full $600,000 – about $36,000 a year, to start.  Based on his age and other factors, Frank also will receive a charitable deduction of about $200,000.  Summing up, Frank has:

  • established an income for life – one that can grow with inflation;
  • reinvested a highly appreciated asset without incurring capital gains tax that would have included $400,000 taxed at a 15% rate and $180,000 taxable at 25%;
  • reduced his income taxes significantly;
  • made a wonderful future gift to the Red Cross.

Why should I support the American Red Cross?  What are the best gift options for me and my family?  How can receive more information about estate and gift planning?  Who can I call in my area for assistance?  Good answers are available when you visit our website www.redcrosslegacy.org.

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Disclaimer:

The articles in the issues of the Legacy newsletters are for general illustration purposes only. Information, Gift annuity and tax rates were current as of the time of publication. There can be no guarantee that such information will continue to be accurate in the future. Interested Donors should check with the Gift Planning Office for current rates and deduction amounts before completing their gifts. Calculations of tax deductions will vary based on applicable federal discount rates, which change on a monthly basis. The American National Red Cross is not engaged in rendering legal or tax advisory service. For advice or assistance in specific cases, the services of an attorney or other professional advisor should be obtained. Certain links in this site connect to other Web sites maintained by third parties over whom the American National Red Cross has no control. American National Red Cross makes no representations as to the accuracy or any other aspect of information contained in other Web sites.