Fractional Gift

DEFINITION of 'Fractional Gift'

A gift that provides a fractional interest in an artwork today, while providing the rest of the interest over a period of time. A fractional gift may allow the donor to still display the work at a non-museum location for a period of time, possibly by alternating time periods with its display at the museum.

BREAKING DOWN 'Fractional Gift'

A fractional gift may be given by a donor who wants to ultimately provide a piece of art to a museum, but who is not ready to fully part with the item presently. The donor will still be able to enjoy a charitable income tax deduction, though the percentage deduction is open to more stringent regulations. Because the Internal Revenue Service discourages fractional gifts, the donor is able to take the less of two values when deducting: 1) an amount based off of the work’s value when the installments began, or 2) the fair market value at a subsequent installment. This means that the donor doesn’t get a larger deduction if the work appreciates in value, and doesn’t get the original value if the work depreciates in value.

Fractional gifts are most likely to be used by donors who are less concerned with obtaining tax deductions from the donation.

 

RELATED TERMS
  1. Gift

    Property, money or assets that one person transfers to another ...
  2. Charitable Gift Life Insurance

    A method of contributing to charity by taking out life insurance ...
  3. Gift Tax

    A federal tax applied to an individual giving anything of value ...
  4. Gift Tax Return

    A federal tax form that must be filled out by any individual ...
  5. Gift In Trust

    An indirect bequest of assets to a beneficiary by means of a ...
  6. Gift Splitting

    A taxation rule that allows a married couple to split a gift's ...
Related Articles
  1. Personal Finance

    Using Life Insurance To Make Charitable Donations

    Your life insurance policy can be a great tool for charitable giving. Find out how.
  2. Financial Advisor

    How to Grow Your Business with Donation Strategies

    Advisors who offer clients expertise in how to charitably donate will likely build a stronger practice and capture more business. Here's why.
  3. Financial Advisor

    Top Tips for Maximizing Charitable Deductions

    Charitable donations can be a great financial planning tool. Here are some ways to make the most of them.
  4. Financial Advisor

    How to Gift Your Way to Lower Estate Taxes

    Estate planning is not just for inheritance. High net-worth individuals, who plan properly, can gift their money and save on taxes.
  5. Financial Advisor

    Guiding Clients on Charitable Remainder Trusts

    Clients who wish to make donations to charity can reap an enormous tax deduction with charitable remainder trusts, but it must be set up correctly.
  6. Financial Advisor

    Cut Your Tax Bill With Donor-Advised Funds

    Beat the tax man come April 15 by investing in a charity-friendly fund.
  7. Investing

    Top Websites For Discounted Gift Cards

    Gift cards can cost less when you buy them through a discount website. Just do the math before you cough up the cash.
  8. Personal Finance

    How to Talk to Your Family About Christmas Gift Budgets

    Talking Christmas gift budgets with family members can be hard, but having the talk will help you stay on track financially.
  9. Personal Finance

    529 Plans: How Much Do You Really Need to Save?

    529 Plans are a popular way to save for college. Here's how to be strategic about how to fund them, depending on your children and their expectations.
  10. Personal Finance

    Top Strategies For Saving In A 529 Plan

    Saving for college can be a daunting task. These 8 strategies can help to make the process a little easier.
RELATED FAQS
  1. How does the gifting process work with a deed transfer?

    My parents own a home that they would like to "gift" to my husband and me. The house is in my parents name and they want ... Read Answer >>
  2. What are the tax deductions for donating office space to a non-profit?

    I have a small (1,500 sq ft) stand-alone office building and parking lot that I donate a 100% of to the American Red Cross. ... Read Answer >>
  3. Justin and Britney, multi-millionaires, want to make the maximum gift of cash to ...

    The correct answer is c. A donor of money and/or gifts may give up to $12,000 to as many different recipients as they desire ... Read Answer >>
  4. If a parent transferred a house deed to their three adult children, do they need ...

    Currently, only the parents Read Answer >>
  5. How can my husband inherit a house deed?

    My mother in law wants to know the best way to leave the deed to her house to her son (my husband). Should it be left in ... Read Answer >>
  6. What are the easiest and most affordable types of charitable trusts to create and ...

    I want to create some kind of charitable trust to name as beneficiary on my stocks, funds, real estate and will. I have no ... Read Answer >>
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center