Ramon has decided to make his $95,000 gift to the American Heart Association in the form of cash. However, he is considering delaying his gift until next year when his AGI will increase to $300,000 and he will be in the 33% income tax bracket, an increase from his current-year income tax bracket of 28%. Assume a 6% discount rate. The present value factors, at a 6% discount rate, are as follows:
Year_______________ PV Factor at 6%
1........................................0.9434
3........................................0.8396
5........................................0.7473
If required, round your final answers to the nearest dollar.
Ramon asks you to determine the tax savings from the tax deduction in present value terms if he were to make the gift this year, rather than delaying the gift until next year.
For purposes of this analysis, ignore the potential impact of the overall limitation on certain itemized deductions.
Total present value of tax savings from the tax deduction if made this year: $
Total present value of tax savings from the tax deduction if made next year: $