Relative Value for a charitable gift?

[coshair]

I cannot understand what the 2nd item is (Notes Book1 p287):
T0*(FV of bequest)
For a charitable gift, it pays no tax for the return and the capital gain, so…just use (1+r)^n would cover all the gift value…what is the second item for?
quite confused…

 

[jmac01]

Not looking at the book. But, for charitable gifts you have the gift which will grow tax free and you also have the deduction on the donor’s income tax return.

 

[coshair]

jmac01 Wrote:
——————————————————-
> Not looking at the book. But, for charitable
> gifts you have the gift which will grow tax free
> and you also have the deduction on the donor’s
> income tax return.
I know this description is from book…however, just take a simple example:
I have a portfolio X and I pay no taxes. My portfolio value would be X(1+r)^n in the end, right? I just dont understand where the 2nd item comes from…

 

[jmac01]

Because there is also value in the deduction you get from making the gift. so the gift itself is worth X(1+R)^N and you get to deduct X from your ordinary income in this year’s income tax return (so calculate the future value if this benefit as well).

 

[deriv108]

It’s the total return for all related parties except Uncle Sam.

 

[programmer]

Check the errata. I thought they removed the charitable gift questions when the donor pays the taxes.