Examples & Illustrations
Facts & Benefits: Peter Jones already gives at least $15,000 per year to his two favorite charities and to his church, through his donor advised fund. He now wants to also start giving $10,000 per year to his alma mater. With the advice of his financial advisor and CPA, Peter has decided to convert his $700,000 IRA to a ROTH IRA. This large "ordinary income" event will result in $259,500 of immediate income taxes. By establishing an iCLAT in the same year as his ROTH Conversion, which will continue to make his desired level of annual gifts for the next 10 years, will save Peter $79,000 in current income taxes this year! PETER'S iCLAT SCHEDULE & ILLUSTRATION ARE SHOWN BELOW.
Case #1: Annual Giver's Roth IRA Conversion + iCLAT = Lower Taxes
Facts & Benefits: Stacy Smith already gives $15,000 per year to her alma mater and two local charities, through her donor advised fund. Stacy is an executive with a large Virginia-based company and just learned that she'll be receiving a large $500,000 bonus at the end of the year. This large "ordinary income" event will result in $213,750 of income taxes ($185,000 of U.S. income taxes and $28,750 of Virginia income taxes). By establishing an iCLAT this year, which will continue to make her desired level of annual gifts for the next 15 years, Stacy will save $77,761 in current income taxes this year ($67,224 in U.S. tax savings and $10,447 in Virginia tax savings)! STACY'S iCLAT SCHEDULE & ILLUSTRATION ARE SHOWN BELOW.
Case #2: Annual Giver Keeps More of Large Bonus
from Her Company by Creating an iCLAT
Facts & Benefits: Thomas Paul is a California trial attorney who loves fine arts and is a long-time donor to the Art Museum of California*. After two years of working on a large civil case, Thomas obtained a huge settlement for his client, and Thomas' attorney fee was $3,000,000. This large "ordinary income" event will result in $1,500,000 of income taxes this year ($1,110,000 of U.S. income taxes and $390,000 of California income taxes) this year. For the past few years, Thomas had been considering a multi-year commitment to the Art Museum of California totaling $1,000,000. After speaking with Thomas, the Sr. VP of Development learned that Thomas was extremely frustrated with the pending income taxes and the fact that he didn't listen to his CPA about doing any pre-sale charitable tax planning. Thomas was very interested in learning if there were any viable "PLAN B" post-sale charitable planning tools for him to consider. The Executive Director proposed an iCLAT, and Thomas loved it! By establishing this iCLAT, which was specifically designed for Thomas to fund his $1,000,000 commitment over an 8-year period at $125,000 per year, Thomas was able to save $442,456 in current income taxes this year ($327,417 in U.S. tax savings and $115,037 in California tax savings)! THOMAS' iCLAT SCHEDULE & ILLUSTRATION ARE SHOWN BELOW.
Case #3: iCLAT is Compelling Tax Savings Solution
for Large Multi-Year Gift by Trial Attorney Donor
Facts & Benefits: Susan Hall is a successful South Carolina physician in her early 50s. Susan is an annual supporter to her local Children's Hospital Foundation and shelter for women recovering from substance abuse. Susan's husband just exercised stock options at his company that resulted in $350,000 of additional taxable income - in addition to their normal combined annual income of $600,000 per year. This spike "ordinary income" event will result in $154,000 of income taxes ($129,500 of U.S. income taxes and $24,500 of South Carolina income taxes). By establishing an iCLAT this year, which will continue to make her desired level of annual gifts for the next 20 years, Stacy will save $83,360 in current income taxes this year ($70,098 in U.S. tax savings and $13,262 of South Carolina tax savings)! SUSAN'S iCLAT SCHEDULE & ILLUSTRATION ARE SHOWN BELOW.
Case #4: Physician Uses Rental Property to Fund iCLAT &
Accelerate Her Income Tax SAVINGS from Charitable Gifts
Facts & Benefits: Lewis Staples, who is a Minnesota resident, is in the final year of his professional baseball contract which pays him $7,500,000/year. Next year, after his retirement, his annual income will drop to under $250,000. For the past few years, Lewis has been actively working with the gift planning team at D & T College,* which is where Lewis played collegiate baseball. Lewis is strongly considering a large multi-year gift of $2,000,000 paid in $500,000 payments over a 4 year period to be used toward the major renovations of the college's baseball stadium. Of course, Lewis is very interested in saving as much income taxes from this multi-year charitable gift. The planned giving team D & T College worked with Lewis' team of professional advisors to design an iCLAT to accelerate the maximum amount of income tax savings this year - while Lewis still had the income to be able to receive the tax savings from such a large multi-year gift. By establishing an iCLAT this year to make 4 annual payments of $500,000 to D & T College, Lewis will receive a staggering $874,911 in current income taxes this year ($690,965 in U.S. tax savings and $183,946 in Minnesota tax savings)! LEWIS' iCLAT SCHEDULE & ILLUSTRATION ARE SHOWN BELOW.