I've seen directly conflicting advice on the tax status of gifting MLP shares to a charity. One expert said you cannot write the value off on your taxes (excepting to the extent of a share price increase beyond your original buying price) and the other said you could donate and write off the full amount just as with any other security. The assumption for this question is that the MLP has been held for some time, resulting in a substantial decrease to the basis.Related question - if you gifted MLP shares to a child in an amount not greater than the allowed gift exclusion (13,000 I believe) do they recieve it on a stepped up basis?Anybody know the answer to either of these?
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I doubt the charity would want to take ownership of the MLP due to their non-profit status and the UBTI they may be responsible to pay when the units are sold, due to the recapture of the Sec. 1245 depreciation. But if they did, you'd have to find out from the MLP what the capital gain portion of the current appreciation is and, I would think, add that to your current adjusted basis to determine the actual gift amount. You will want to double check this, but I'm pretty sure this is how it would work.As to gifts to a non-spouse....the basis and the holding period will transfer to the giftee. As in the case of all gifts of investments, make sure the fair value exceeds your adjusted basis. Gifting a loss is never a good idea, as the giftee would then have a dual basis and you would lose the ability to take the loss.BruceM
The gift amount to a charity is the face value on the date of gifting; your basis has no relevance to the giftee. if it is not a charity, as Bruce said, your basis and holding period transfer to the giftee. do not take my word for it!
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