Gifts of life insurance policies to not-for-profit organizations can benefit both the organization and the donor, the latter in the form of an often sizeable income tax charitable deduction. However, under the requirements of the Pension Protection Act of 2006 (PPA),
determining the fair market value of policies requires the help of an appraiser with the appropriate expertise and experience. In this article from the Journal of Accountancy, appraiser Alan Breus, CLU, ChFC reviews current appraisal requirements and appraiser qualifications.  MORE »

The U.S. District Court has permanently enjoined several tax return preparers from preparing returns for compensation based on the court's finding the defendants understated the tax due (and overstated the refunds due) on customers' federal income tax returns by claiming false and inflated itemized deductions for charitable contributions and employee business expenses.  MORE »

The Service has ruled privately that a transfer of an income recipient's entire income interest in a trust created before the effective date of the Tax Reform Act of 1969, which created charitable remainder trusts, to charity will qualify for income tax and gift tax charitable deductions for the value of the interest transferred. In addition, should the income recipient die within three years of the transfer, her estate will qualify for an estate tax charitable deduction under § 2055 for the amount included in her estate.  MORE »

The Service has approved the early termination a net income charitable remainder unitrust and distribution of trust corpus between income recipient and charitable remaindermen, each according to their actuarial interests, based on the use of a special factor that is based on the lesser of the trust's stated payout percentage or the IRC section 7520 rate for the month of termination.  MORE »

The Service has ruled privately that a private foundation can take an additional five years to dispose of publicly traded stock that is subject to the excess business holdings rules under IRC section 4943(c)(1). The extension was granted based on the foundation's representation that it made diligent efforts to dispose of the stock; however, was unable to do so due to securities law and corporate sale limitations, thin trading volume, lagging stock price, and a disposition plan submitted to the IRS and State Attorney General by the foundation in satisfaction of IRC section 4943(c)(7).  MORE »

The Service has released new Form 990 Instructions for the 2008 tax year. The new Form 990 consists of an 11-page, 11-part core form that is required to be completed by all organizations that file the Form 990, and Schedules to be completed by those organizations that satisfy the applicable requirements for each Schedule.  MORE »

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 2008-46 indicates the applicable federal rate under section 7520 for September 2008 is 4.2%; unchanged from the August and July rates of 4.2%.  MORE »

Two new bills that would increase the mileage rate for charitable purposes have been introduced, bringing the total to four now under consideration by Congress.  MORE »

The Service has approved a proposed judicial modification of a testamentary trust based on its finding the trust meets the reformable interest tests under section 2055(e)(3) to qualify as a charitable remainder trust under section 664 and for the Federal estate tax charitable deduction under section 2055(a).  MORE »

The Service has ruled privately that a power of a Special Trustee of a charitable remainder unitrust to allocate payments among the beneficiaries and a power retained by the trustor (or her spouse if she predeceases her spouse) to appoint the Special Trustee or appoint assets among one or more charitable organizations does not prevent the trust from qualifying as a CRT. Further ruled, the transfer qualifies for the gift and estate tax marital deductions.  MORE »

The Service has ruled privately that reasonable fees charged by a community trust for providing grant-making services to separate tax-exempt organizations will not constitute unrelated business taxable income under section 512 of the Code. Also ruled, reasonable fees charged for providing administrative clerical, legal, and computer services, to separate tax-exempt organizations will constitute UBTI, and therefore will be subject to unrelated business income tax under section 511.  MORE »

The Service has ruled privately that reasonable fees charged by a community foundation for providing grant-making services to separate tax-exempt organizations will not constitute unrelated business taxable income under section 512 of the Code. Also ruled, reasonable fees charged for providing administrative clerical, legal, and computer services, to separate tax-exempt organizations will constitute UBTI, and therefore will be subject to unrelated business income tax under section 511.  MORE »

In two companion rulings, the Service has ruled privately that a merger of two public charities described in section 501(c)(3) will not result in the revocation of or otherwise adversely affect either organization's continued tax-exempt status as a public charity, will not generate unrelated business taxable income to either organization, and will not adversely affect the support test of either organization.  MORE »

The IRS has issued Rev. Proc. 2008-46 which contains annotated a sample declaration of trust and alternate provisions for a testamentary charitable lead unitrust with payments to one or more charitable beneficiaries for the unitrust period followed by the distribution of trust assets to one or more noncharitable remaindermen.  MORE »

The IRS has issued Rev. Proc. 2008-45 which contains annotated sample declarations of trust and alternate provisions for grantor and nongrantor inter vivos charitable lead unitrusts with payments to one or more charitable beneficiaries for the unitrust period followed by the distribution of trust assets to one or more noncharitable remaindermen.  MORE »

On June 7, 2007, Treasury issued proposed regulations that address the portion of a trust that is includable in a deceased grantor's gross estate under sections 2036 and 2039 in the event the grantor has retained the use of trust property or the right to an annuity or other income payment from the trust for life. Following the comment period and public hearing, Treasury has issued final regulations that are effective July 14, 2008. In addition to amounts includable with respect to GRATs, GRUTs, GRITs and CRTs measured by life, the final regulations address pooled income funds, remainder interests in personal residences and farms, and CRTs measured by a term of years.
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The Service has issued a long-awaited revenue ruling in which it addresses two situations in which a charitable remainder trust is divided pro rata into two or more separate trusts. Such divisions are common when the income recipients desire to separate their interests and when joint income recipients divorce.  MORE »

Writing on behalf of the American Council on Gift Annuities, Lindsay Lapole and Frank Minton have announced the State of New York has issued new reserve requirements for charities that issue charitable gift annuities in New York.  MORE »

The Treasury Inspector General for Tax Administration has issued a report on its Political Activities Compliance Initiative that seeks to educate tax-exempt organizations regarding political campaign intervention, improve internal processes, and detect tax-exempt organizations that are potentially involved in repeated campaign intervention. Although progress has been made, the report concludes that timeliness goals can be improved.  MORE »

The Service has ruled privately that investment units created by a university from its endowment fund for the purpose of investing in charitable remainder unitrusts for which the university serves as trustee are capital assets under section 1221. Accordingly, gain or loss upon the redemption of a unit will be short or long-term capital gain or loss to the unitrust depending on the holding period of the unit by the unitrust.  MORE »

According to a new article by Barlow Mann of The Sharpe Group, organizations asking their older donors to simply include them in their will may be missing a tremendous opportunity: current gifts of publicly-traded securities and other non-cash assets.  MORE »

One of the greatest planning challenges for many philanthropists is to balance their goals of providing for charity in the immediate term and family members long-term. In this case study, The Sharpe Group illustrates how a couple concerned about an uncertain gift and estate tax environment uses an inter vivos nongrantor nonrersionary charitable lead annuity trust as a "temporary" private foundation.  MORE »