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Donating... the Smart Way.

When an appreciated asset is donated, a charity receives an item (real estate, stock, etc.) that was purchased years prior at a lower basis. The charity gets the full value of the asset, and the donor gets a corresponding tax write-off.

A required minimum distribution applies to individuals over 70.5 with a pretax retirement account. Rather than pulling money out and getting taxed, individuals can send a check directly from their account to a charity of their choice. This avoids taxes, giving the charity a larger sum than if it were taxed first.

One method that caught attention was donor-advised funds. They allow the donor to place an amount of assets into an account for the sole purpose of donating it in the future. The donor gets the entire value as a tax write-off the year an asset is placed in the account, while maintaining control over the money. This approach is particularly beneficial for those in high tax brackets with the intention of donating in the coming years.