On October 3, 2008, Congress passed and President Bush signed into law the Emergency Economic Stabilization Act of 2008. Of all the last minute sweeteners added to the Senate version of the bill, one of the sweetest for charitable organizations and those who support them was an extension of the charitable IRA rollover provisions that expired at the end of 2007. In this article, The Sharpe Group reviews these provisions and offers resources that can help organizations and advisers assist their donors and clients to take advantage of this renewed giving opportunity.  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 2009-01 indicates the applicable federal rate under section 7520 for January 2009 is 2.4%; down 1.0% from the December rate of 3.4% and down 1.2% from the November rate of 3.6%. In addition, the deemed rate of return for transfers during 2009 to pooled income funds that have been in existence for less than three taxable years is 4.8%, unchanged from the 2008 deemed rate.  MORE »

In a legal memorandum, the Service has determined a testamentary trust that was named as the beneficiary of a decedent's IRA cannot claim an income tax deduction under section 642(c) for payments it made to charities. The trust was to pay a percentage of the trust property to the decedent's children and to several charities; however, it failed to meet the regulatory definition of a designated beneficiary trust under section 401(a)(9). Although the trust was subsequently modified by court order to comply, the Service determined the purpose of the modification was to permit the trust to deduct payments made to charities. Citing a revenue ruling and court decision, the Service concluded that since the modification was not made as the result of a conflict, the payments to the charities are not considered to be made under the governing instrument and, therefore, are not deductible.  MORE »

In emailed Chief Counsel Advice pursuant to a pending case, the IRS reviews the contemporaneous written acknowledgment requirements for gifts of conservation easements under section 170(f)(8)(A).  MORE »

The IRS has ruled privately that a transfer by taxpayer to a charity in exchange for a charitable gift annuity will be deductible for income and gift tax deduction purposes and will not be barred by § 170(f)(10)(A) (relating to split-dollar life insurance, annuity and endowment contracts). In this case, the charity will use a portion of the amount transferred by the donor (in the form of a single premium) to purchase a commercial annuity contract to cover its obligations under the gift annuity agreement. The commercial contract will include an option that returns a portion of the premium paid by the charity to it in the event the annuitant dies prior to the aggregate payments made by the insurer equaling or exceeding the premium paid.

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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 2008-53 indicates the applicable federal rate under section 7520 for December 2008 is 3.4%; down 0.2% from the November rate of 3.6% and down 0.4% from the October rate of 3.8%.  MORE »

Congress has passed and sent to the President for signature H.R. 7327, the Worker, Retiree and Employer Recovery Act of 2008, a bill that places a one year moratorium on required minimum distributions from Individual Retirement Accounts and defined contribution plans for 2009. Although the intent of the legislation is to give retirees an opportunity to recoup financial losses suffered in the last year, it may adversely affect some charitable IRA rollovers.

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Yesterday, the Planned Giving Design Center reported incorrectly that H.R. 7327, the Worker, Retiree and Employer Recovery Act of 2008, included a provision that would enable plan participants to recontribute to their retirement accounts the amount they were required to withdraw in 2008. In fact, that provision is included in proposed legislation introduced on December 8, 2008 by Senator Olympia J. Snowe (R-Maine). The full text of the Retirement Account Distribution Improvement Act of 2008 can be found at http://www.thomas.gov/cgi-bin/query/z?c110:S.3719: We apologize for our error.

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A magistrate judge in the U.S. District Court for Colorado has granted a plaintiff's motion to compel the IRS to produce a "matrix" which is a compilation of valuation data on thirty-five sales of real property subject to conservation easements. Plaintiffs argued the matrix and identity of the additional properties would reveal the analysis and methodology used by the IRS to determine the value of Plaintiffs' easements and enable Plaintiffs to bear their burden of rebutting the valuation made by the IRS and putting forth the appropriate valuation. The court agreed.  MORE »

The Ninth Circuit Court of Appeals has affirmed the Tax Court's decision affirming the disallowance of deductions petitioners-appellants claimed for tuition and fees paid to their children's religious day schools.  MORE »