It is not uncommon for charitable remainder trusts to hold depreciable property or to hold an interest in a passthrough entity that holds depreciable property. In this article, Ted R. Batson, Jr., Vice President of Professional Services for Renaissance Inc., discusses the proper allocation of depreciation deductions between various forms of charitable remainder trusts and their income recipients.  MORE »

The National Committee on Planned Giving has released standards for determining the value of all types of planned gifts to charitable organizations. Unlike present value computations for income, gift and estate tax compliance purposes, the new valuation standards are intended to help charitable organizations and donors understand the value of irrevocable and revocable planned gifts in terms of their present purchasing power.

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In a letter sent shortly after the government froze $500 million in Xelan assets, Michael C. Durney, a former Justice Department Deputy Assistant Attorney General for the Tax Division and current litigant in the Xelan matter, wrote Eileen O'Connor, Assistant Attorney General for the Tax Division, that the action was unprecedented and unwarranted.  MORE »

One of the most significant differences between a charitable gift annuity and a charitable remainder trust is the obligation to make gift annuity payments is a general obligation of the issuing charity whereas the obligation to make payments from a CRT is limited to the trust itself. For this reason, organizations issuing charitable gift annuities set aside, either voluntarily or subject to state law, a portion of the amount transferred in exchange for the gift annuity in a reserve fund for the purpose of satisfying the annuity payments. The problem is that in recent years, the low interest rate environment has caused some reserves to decline to worrisome levels. In this paper, nationally recognized planned giving authority Frank Minton analyzes the various kinds of risks associated with gift annuities, shows how charities can minimize risk and maximize the benefits of their gift annuity programs, and shares some less traditional ideas for attracting more dollars for gift annuities.  MORE »

The Senate on October 11 finally approved by a 69-17 vote a bicameral agreement (H.R. 4520) to replace the extraterritorial income exclusion with a revenue-neutral package that includes a manufacturing deduction, a corporate rate cut, and international tax reforms. The House approved the $140 billion corporate tax cut bill on October 7 by a 280-141 vote; it now heads to President Bush's desk for his signature. The final bill includes provisions that will increase reporting requirements by corporations for noncash charitable contributions, reduce deductions for gifts of intellectual property, impose stiff requirements on gifts of vehicles, and extend the existing deduction for gifts of computer equipment used for education and of scientific property used for research.  MORE »

The IRS has ruled in technical advice that although an organization is no longer a church, it will retain its tax-exempt status and be subject it to intermediate sanctions for automatic excess benefit transactions and political intervention.  MORE »

In technical advice, the Service has ruled that an individual's bequest to a sister who belongs to a religious order and took a vow of poverty does not qualify for an estate tax charitable deduction.  MORE »

The Service has announced that it intends to propose regulations modifying the regulations under section 4940 of the Internal Revenue Code of 1986, as amended, with respect to distributions received by private foundations from trusts and estates.  MORE »

The Service has ruled in technical advice that excise taxes under section 4958 should be imposed on the founder of a charitable organization who used the foundation as a personal checking account for unrelated expenses. The Service recommended an initial 25 percent tax of the excess benefit and a 200 percent excise tax because the transactions were not corrected within the taxable period. In separate TAMs, the Service also recommended similar taxes be imposed on the founder's spouse, two sons, and son-in-law.  MORE »

The IRS and Treasury have identified a type of transaction in which S corporation shareholders attempt to transfer the incidence of taxation on S corporation income by purportedly donating S corporation nonvoting stock to an exempt organization, while retaining the economic benefits associated with that stock. This notice alerts taxpayers and their representatives that these transactions are tax avoidance transactions and identifies these transactions, and substantially similar transactions, as listed transactions and alerts parties involved with these transactions to certain responsibilities that may arise from their involvement with them.  MORE »