A donor irrevocably transfers money or an appreciated asset (stocks, bonds, real estate, tangible personal property) to a charitable organization in return for its contractual obligation to pay the donor, another or both, fixed, guaranteed payments for life. Tax benefits include charitable income tax deduction, partial avoidance of capital gains tax, potentially tax free income, and estate tax reductions.
Deferred Payment Gift Annuity
Deferred Payment Gift Annuity. A donor irrevocably transfers cash or an appreciated asset (stocks, bonds, real estate, tangible personal property) to a charitable organization in exchange for its promise to pay an annuity to the donor, another or both, to begin more than one year from the date of transfer. The donor is able to make a gift now and get an income tax charitable deduction when he or she is in a high tax bracket, deferring payment until those years when the donor may need the income more (e.g., after retirement) and may be in a lower income tax bracket.