State provides additional tax incentives
As a 501(c)3 charitable organization dedicated to providing beef industry scholarship, leadership, promotion, research and building opportunities, it is always a good time to invest in the North Dakota Stockmen’s Foundation. Most contributions are tax-deductible for donors.
A state law provides additional tax credit incentives for those who give specific types of gifts to qualifying North Dakota charities. The credit may be carried forward for three additional tax years if it can’t all be used in one year.
State tax credit for planned or deferred gifts
Individuals may make a qualified deferred gift to a qualified North Dakota non-profit organization. The Stockmen’s Foundation is considered a qualified charity, as it is an established 501(c)3 to which contributions qualify for federal charitable income tax deductions and it has a North Dakota business presence. The tax credit is 40 percent of the charitable deduction allowed by the Internal Revenue Service (IRS), up to a maximum of $10,000 per year per taxpayer or $20,000 per year per couple filing jointly. This credit is effective for taxable years starting in 2007.
For example, let’s say a couple enters into a $200,000 charitable gift annuity agreement with the Stockmen’s Foundation. The IRS allows them to deduct $100,000 from their federal taxable income as a charitable gift. The couple would qualify for a $20,000 North Dakota income tax credit. They could take up to four years to take the credit against their North Dakota income tax liability. The credit is limited to the amount of their income tax liability.
State tax credit for endowment gifts
Businesses (C corporations, S corporations, estates, limited liability companies, trusts and financial institutions) that pay North Dakota income tax may take a 40 percent credit up to a total of $10,000 for gifts to the qualified endowment fund of a qualified North Dakota charity. While the Stockmen’s Foundation does not yet have an established endowment, it is poised to work with donors to establish one. This credit is effective for taxable years starting in 2011.
Individuals may receive a state tax credit for a contribution of $5,000 or more (lump sum or aggregate in one year) to a qualified North Dakota endowment. The tax credit is 40 percent of the charitable deduction allowed by the IRS, up to a maximum credit of $10,000 per year per taxpayer or $20,000 per year per couple filing jointly. The credit is effective for taxable years starting in 2011.
A qualified endowment is a permanent, irrevocable fund (comprising cash, securities, mutual funds or other investment assets established for a specific charitable, religious or educational purpose and invested for the production or growth of income or both, which may either be added to principal or expended) held by a qualified non-profit organization or bank or trust company holding the fund on behalf of a qualified non-profit organization.
For information about these tax incentives, call Julie Ellingson at (701) 223-2522 or consult your attorney or tax adviser.