Glossary of Terms beginning with C

Securities that give the holder the right to purchase a particular security at a set price by a specific future date.

Generally, property held for personal use, actually almost everything you own is a capital asset. Gain from a sale or exchange of that property is a capital gain.
Examples of capital assets: investment property, i.e. stocks and bonds, a home owned and occupied by family, household furnishings, jewelry, stamp collections.
See IRS Publication 544 - Sales and Other Dispositions of Assets (Rev 2012). www.irs.gov/pub/irs-pdf/p544.pdf

Synonym of “Appreciation” - The difference between the adjusted basis of an asset and its current market value (assuming it has increased in value).

A tax payable on the appreciation of property when the owner sells the property. As of January 1, 2013, there is a new long-term capital gains rate of 20% which applies to taxpayers who fall within the new 39.6% tax bracket. The new capital gains tax rates for 2013 and future years are as follows:
• 0% applies to long-term gains and dividend income if a person is in the 10% and 15% tax brackets,
• 15% applies to long-term gains and dividend income if a person is in the 25%, 28%, 33%, or 35% tax brackets, and
• 20% applies to long-term gains and dividend income if a person is in the 39.6% tax bracket.

The amount of money received by a policyholder from a life insurance company when the holder surrenders a policy for cash prior to the maturity date.

contract with a bank or other approved thrift institution whereby you agree to deposit a set amount of money for a period of time and the bank agrees to pay you a set rate of interest. As of 2014 the US government guarantees C/D’s up to $250,000 per depositor per bank.  It is not unusual for donors to use numerous banks to assure their money is protected and because each institution sets their own interest rates.

A provision in a will, trust or estate plan that allocates a gift to a designated charity. The most common gifts to charities are cash, securities, real estate, personal property. “I give, bequeath, and devise the…” is likely still the most frequently used language in a will or trust.

Contributions that a donor is not able to deduct in the current year because they exceed the adjusted gross income (AGI) limits can be carried over into the next 5 years. The excess is deductible in each of the next 5 years until the deduction is used up. The total deduction for the years for which the carryover applies can never exceed 50% of the AGI and may in fact be less than 50%.

A deduction permitted under each of the income, gift, and estate tax chapter of the Internal Revenue Code for transfers made to a qualified charity.

A contract between the donor and the charity in which the donor transfers assets to the charity and the charity agrees to pay a specified sum of money each year to a beneficiary for life. The donor can claim as a charitable income tax deduction the difference between the present value of the expected payments and the value of the assets transferred to the charity.

A portion of a gift made to a charity in exchange for a gift annuity that the charity is required by state law to hold in a reserve fund. The reserve fund is designed to ensure that the charity has sufficient assets to make annuity payments to beneficiaries.

The amount a donor can deduct on his/her federal income tax return for a gift to a qualified charity.

A trust in which the donor transfers income producing assets to a trust and instructs the trustee to pay a fixed amount or annual percentage to charity for the term of the trust. At the end of the trust tem, assets remaining in the trust are conveyed to the donor or his/her beneficiary or beneficiaries.

The assets left in a charitable trust, gift annuity, or pooled income fund that eventually pass to a qualified charity.

A trust that provides for payment of a fixed percentage of the initial fair market value of the trust property to an individual beneficiary for his/her lifetime, or for a term of years (not to exceed 20), with the trust remainder payable to a qualified charitable organization.

The amount expected to be received by a charity from a charitable remainder trust at the termination of the trust. The present value of the charitable remainder interest is used to determine the donor’s income tax charitable deduction.

Under Code Section 664 (d) (2) and the regulations thereunder, there are four (4) variations of the Unitrust: 1) “Standard” Unitrust – donor irrevocably transfers money, securities or property to a separately invested trust with one or more initial individual beneficiaries and a charitable remainderman. The trust makes payments to the named individual beneficiaries at least annually in the amount equal to a fixed percentage (not less than five percent) of the net fair market value of the trust assets determined once each year. The donor may designate himself and/or other beneficiaries to receive these payments for life so long as the designated beneficiaries are alive at the time the trust is created. Alternatively the trust instrument may provide for unitrust payment to be made for a term of years not to exceed twenty. At the expiration of all income interests the assets are distributed to the charitable organization(s). 2) “Net Income” Unitrust – the same as a “standard” unitrust except the payments to the beneficiary are limited to the lesser of the net income of the trust and the unitrust percentage amount stated in the trust agreement. 3) “Net-Plus-Makeup” Unitrust – Administered as a net income unitrust, except that payments may exceed the state unitrust percentage amount up to, but not exceeding, the amount required to make up any accumulated deficiencies from prior years (years in which the trust’s net income was less than the stated percentage amount). 4) In a "flip CRUT", the donor establishes a net income CRUT, typically with illiquid assets. After a specific future event, such as sale of the assets, death, or a particular attained age of the donor, the trust is converted to a standard CRUT, paying out a fixed percentage distribution of market value of the trust assets, until the trust terminates.

A corporation owned by a specific group of individuals, usually family members or business partners. Stock in a closely held corporation is not available for sale to the general public.

Stock of a closely held corporation, the sale of which may be subject to the approval of the corporation.

Acronym for “Charitable Lead Trust” - A trust in which the donor transfers income producing assets to a trust and instructs the trustee to pay a fixed amount or annual percentage to charity for the term of the trust. At the end of the trust tem, assets remaining in the trust are conveyed to the donor or his/her beneficiary or beneficiaries.

An addition or amendment to a person’s will.

Rare object collected by investors. Examples: coins, stamps, oriental rugs, antiques, baseball cards, photographs. Collectibles typically rise sharply in value during inflationary periods when people are trying to move their assets from paper currency as an inflation hedge, and then drop in value during low inflation. Collectible trading can be quite difficult because of the limited number of buyers and sellers. May make a good gift – may not.

Bulk goods such as coffee, corn, livestock, grains and metals that are bought and sold on commodities exchanges.

Securities representing equity ownership in the issuing corporation. In the event of liquidation, a common stock holder has rights to the corporation’s assets only after the obligation to bond holders, other dept holders, and preferred stock holders has been met.

A tax-exempt, nonprofit, autonomous, publicly supported, nonsectarian philanthropic institution with a long term goal of building permanent, named component funds established by many separate donors to carry out their charitable interests and for the broad-based charitable interest of and for the benefit of residents of a defined geographic area, typically no larger than a state. 

Assumes that property acquired during marriage is jointly owned – except for property brought into the marriage or acquired by gift or inheritance during marriage. Community property states include: AZ, CA, ID, LA, NV, NM, TX, WA, WI.

The Consumer Price Index is a cost-of-living benchmark for the intention of measuring inflation in the US. It affects cost-of-living adjustments for everything from Social Security to tax schedules.

This is a provision in a will, trust or estate plan that allocates a gift to your organization as an alternative to higher priority bequest or some condition that must be met. “If all my pet birds predecease me I give, bequeath, and devise the…”.

IOUs issued by a corporation. By purchasing a corporate bond you are lending money to the corporation. A major source of corporate borrowing.

The income-producing principal of a fund, estate, or trust.  Frequently referred to as the ‘principal’ amount.

The original cost of property, plus improvements and other expenses paid by the owner during the period of ownership.

A measurement that attempts to calculate the effectiveness of a development office or some special effort such as a campaign. There is no standard method between organizations so cost per dollars raised can vary widely depending on what expense items are included in the calculation. Typically costs include salary and benefits, office expenses, outside vendor charges, legal/financial management and support, printing-maiing-postage costs, data processing expense.

Acronym for “Charitable Remainder Annuity Trust” – A trust that provides for payment of a fixed percentage of the initial fair market value of the trust property to an individual beneficiary for his/her lifetime, or for a term of years (not to exceed 20), with the trust remainder payable to a qualified charitable organization.

Acronym for “Charitable Remainder Unitrust” - Under Code Section 664 (d) (2) and the regulations thereunder, there are three (3) variations of the Unitrust: 1) “Standard” Unitrust – donor irrevocably transfers money, securities or property to a separately invested trust with one or more initial individual beneficiaries and a charitable remainderman. The trust makes payments to the named individual beneficiaries at least annually in the amount equal to a fixed percentage (not less than five percent) of the net fair market value of the trust assets determined once each year. The donor may designate himself and/or other beneficiaries to receive these payments for life so long as the designated beneficiaries are alive at the time the trust is created. Alternatively the trust instrument may provide for unitrust payment to be made for a term of years not to exceed twenty. At the expiration of all income interests the assets are distributed to the charitable organization(s). 2) “Net Income” Unitrust – the same as a “standard” unitrust except the payments to the beneficiary are limited to the lesser of the net income of the trust and the unitrust percentage amount stated in the trust agreement. 3) “Net-Plus-Makeup” Unitrust – Administered as a net income unitrust, except that payments may exceed the state unitrust percentage amount up to, but not exceeding, the amount required to make up any accumulated deficiencies from prior years (years in which the trust’s net income was less than the stated percentage amount).