I recently attended a seminar about gifts of intellectual property led by David Wheeler Newman, an attorney from Los Angeles who often speaks on gifts of complex assets. Because demand for these assets has increased, so has their value and potential for enhanced tax benefits.
What is a gift of intellectual property? Intellectual property is an intangible asset that refers to creations of the mind. While intellectual property may include trade secrets, royalty interests and other intangible property, the most common forms of intellectual property are copyrights, patents and trademarks.
What are the tax benefits for the donor? For most charitable contributions, donors receive the deduction only for its value when the gift was donated to charity. However, the value of intellectual property is determined by the actual revenue generated. This means that a donor who makes a qualified intellectual property contribution will receive:
- an immediate deduction for the value of the product when gifted, and
- subsequent deductions for any licensing or royalty advances the charity may receive as a result of the gifted intellectual property.
Intellectual property is one of many creative pathways by which donors may contribute to charity. If you are interested in learning more about how SVCF can tap into the potential of gifts of intellectual property or any complex asset, please contact our office at firstname.lastname@example.org or 650.450.5444.