Creating a charitable giving plan in advance provides you with the opportunity to make tax-wise contributions. For example, if you have held securities for over a year and they have increased in value, consider giving those to charity. When you contribute appreciated property that you have held over a year, you not only qualify to deduct the property s full appreciated value, but you also avoid paying capital gains tax on the profit. With time on your side, you can better work toward the concept of bunching deductions the practice of accelerating expenses into this year if it appears you might reach the floor, or deferring expenses into the following year if you don t expect to exceed the floor in 2001. Another strategy you might consider now for reducing your 2001 taxable income is to shift income to other family members.
Income generated by the gift is taxed to the new owner.
Don t wait until the last minute to consult with a CPA who can help you minimize your tax bill.