Memorial Sloan Kettering

Gift Annuities

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EXAMPLE SCENARIOS * 1 TAX-FAVORED PAYMENTS Joan, 70, established a gift annuity with $25,000 in cash. She receives $1,275 in payments each year for the rest of her life as well as these benefits: • Joan is allowed a charitable tax deduction of $9,752 ¹ in the year the gift is made. • Approximately $959 of Joan's $1,275 payment will remain tax-free until she reaches her life expectancy. After that time, she will pay tax on the full gift annuity payment. 2 CAPITAL GAINS TAX BENEFITS John and Marilyn are, respectively, 80 and 75. They created a gift annuity using $100,000 in appreciated securities, which they originally bought for $60,000 more than one year ago. The couple will receive $5,300 each year in quarterly payments for as long as either one of them is living. If Marilyn survives John, for example, she will continue to receive the full $5,300 payment. In addition: • They are allowed an income tax charitable deduction of $39,137 ¹ in the year of the gift. • If they had instead sold their stock, they would have incurred $40,000 in capital gains and owed, under a 15% long-term capital gains rate, $6,000 in taxes. Because they funded a gift annuity with appreciated stock, their capital gain was reduced from $40,000 to $24,345 and is reported pro-rata over their life expectancies. • Throughout their combined life expectancies of 14.8 years, a portion of their annuity payment is tax-free ($2,468), a portion is taxed as long-term capital gain ($1,645), and a portion is taxed as ordinary income ($1,187). After 14.8 years, the entire annuity is taxed as ordinary income. * These examples are for illustrative purposes only and do not represent actual donors. Annuity rates are subject to change. Please contact us for current rates. ¹ Based on quarterly payments and a 2.0% charitable midterm federal rate. With a gift annuity, you can designate your support toward one of MSK's many cancer research and patient care programs, such as the work of interventional radiologists Stephen Solomon, MD (left) and Majid Maybody, MD (right).

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