The next FPA luncheon will be Monday, May 19th at the Vassar College Alumnae House in Poughkeepsie.

The IRS has scheduled a phone forum for tax professionals and representatives of tax-exempt organizations on Rules for Exempt Organizations During an Election Year. The forum will be presented on June 9, 2008, and repeated June 10, 2008.  MORE »

The IRS has provided interim guidance on the requirement that section 501(c)(3) organizations (charities) make available for public inspection Forms 990-T, Exempt Organization Business Income Tax Return.  MORE »

The Service is reminding small tax-exempt organizations whose tax year ended on December 31, 2007 that the first e-Postcards are due by May 15, 2008. For organizations with a tax year that ends after December 31, 2007, the e-Postcard is due by the 15th day of the 5th month after the close of their tax year.  MORE »

The IRS is requesting further comments concerning Revenue Procedure 2005-24, Waiver of Spousal Election and Notice 2006-15, Extension of June 28, 2005, Safe Harbor Date. Rev. Proc. 2005-24 provides a safe harbor procedure to avoid the disqualification of a charitable remainder trust because of the existence of a spousal right of election under state law. Notice 2006-15 extends the safe harbor date pending further guidance from the IRS.  MORE »

Are charitable remainder unitrusts measured by the life of the trust's income recipients always the automatic recommendation for younger donors? In this case study, we examine how of the challenges of providing dependable cash flow and meeting a capital campaign crediting goal can be met through the use of a term of years charitable remainder annuity trust. 

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The Service has granted relief under the inadvertent termination rules to an S corporation owned by two electing small business trusts (ESBTs) that included a charitable remainder unitrust as a potential current beneficiary (PCB). PCBs are considered shareholders for purposes of the ESBT qualification rules; however, charitable remainder trusts are not permissible shareholders under these rules. The two trusts were reformed to provide that only 20 qualified charities, defined as organizations described in § 1361(c)(6), may receive distributions from the trusts.  MORE »

The Service has blessed a proposed judicial reformation of an inter vivos charitable remainder unitrust to remove a net income with makeup provision based on the fact it was not the intention of the parties to include the provision in the first place. In our opinion, however, this problem and near litigation that followed could have been easily avoided.  MORE »

The Service has denied tax-exempt status under section 501(c)(3) to an organization based on the fact it existed primarily for the purpose of selling annuities to individuals who wished to exchange assets for estate planning purposes. What was distinguishable in this case was that less than one half of one percent of the funds it received were used for charitable purposes. Therefore, the Service deemed the activity to be an unrelated trade or business without a charitable program commensurate in scope.  MORE »

The Service has ruled privately that a multi-generational trust created in 1954 cannot be reformed into a valid charitable remainder unitrust because the provisions under section 2055(e)(3) allowing such reformation apply only to trusts created after 1969.   MORE »

In February of this year, Congress passed the Economic Stimulus Act of 2008. Included in this bill is a provision for up to 130 million taxpayers to receive tax rebates. In this special report, Robert Sharpe, Jr. and Barlow Mann from The Sharpe Group discuss what they believe to be a tremendous opportunity and advantage for taxpayers to donate their rebates to charity.
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Private letter rulings dealing with the early termination of charitable remainder trusts with the division of income and remainder interests between income beneficiaries and charitable remaindermen have become so commonplace that we’re sure most PGDC readers simply ignore them. THIS ONE IS WORTH READING!
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The Service has ruled privately that a taxpayer who is an individual member of a cooperative and elects to direct the cooperative to transfer amounts redeemable as patronage dividends or as rebates earned on cooperative credit card purchases to charity can deduct such amounts under § 170.

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The Service has ruled privately in two companion rulings that a husband and wife can terminate a 10% net income with makeup provision charitable remainder unitrust by selling their income interests to the charitable remainderman for an amount equal to the present value of their remaining actuarial income interests and that such sale will not be deemed a prohibited act of self-dealing.

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For purposes of determining the present value of an annuity, an interest for life or a term of years, or a remainder or a reversionary interest, Revenue Ruling 2008-24 indicates the applicable federal rate under section 7520 for May 2008 is 3.2%; down 0.2% from the April rate of 3.4% and down 0.4% from the March rate of 3.6%.

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Although the IRS last week canceled a public hearing in Washington, D.C. on proposed regulations for the new unrelated business income tax rules applicable to charitable remainder trusts, two firms from the State of Washington have asked for transitional relief in the form being able to elect the lesser of the taxes under the old and new law in order to allow CRTs time to restructure their investments.

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The Internal Revenue Service recently released for public comment the draft instructions to the 2008 Form 990, which is the return most tax-exempt organizations must file annually. The IRS seeks public comment on the draft instructions to ensure that the final instructions meet the needs of the tax-exempt community. The public comment period will run until June 1, 2008.

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Writing on behalf of the Estate & Gift Taxation Committee of the Association of the Bar of the City of New York, Michael I. Frankel has pointed out inconsistencies in private letter rulings regarding the calculation of income interests for net income charitable remainder unitrusts that propose to terminate early. Some rulings indicate that "one" reasonable method of calculating the actuarial value of the income interest use the lower of the stated percentage distribution rate of the NIMCRUT or the Code § 7520 rate in effect for the month of termination while others use only the Code § 7520 rate in effect for the month of termination. The bar urges IRS to issue guidance that uses the same method that is used to value income interests when a NIMCRUT is created.  MORE »

At its April 2, 2008 meeting, the ACGA Rates Committee has recommended and the ACGA board approved a new, lower schedule of gift annuity rates for immediate gift annuities, effective on July 1, 2008. In addition, the deferred gift annuity rates which became effective on July 1, 2006 will also be lower.  MORE »

In two recently issued private letter rulings, the Service has held that a special independent trustee of a charitable remainder unitrust in its sole discretion can allocate a portion of the annual unitrust amount to any of the trust's income recipients and any organization qualified under sections 170(c), 2055(a), and 2522(a). In addition, the trustor will retain the power to substitute the charitable remainderman, provided that at least one-third of the remainder interest is distributed to public charities, and will retain the power to substitute the special independent trustee.

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