Ask the Experts!
The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers. Here’s the question of the day.
Question: My client is interested in making a charitable gift of a nonqualified deferred annuity (NQDA). What are the tax consequences of making such a gift?
Answer: The transfer of a NQDA by one taxpayer to a new nonspouse owner is treated as a taxable disposition of the annuity. In this case, the transfer to charity would be taxed as a surrender, causing the owner to recognize the income tax—and potential penalty tax—on the gain in the contract.
The entire value of the annuity contract would be potentially deductible as a charitable gift, subject to normal charitable deduction limits.
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