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In a divided opinion, the Tax Court has ruled that an estate is not entitled to an estate tax charitable deduction for the present value of annuity payments made to a family foundation from a testamentary charitable lead trust because the trust was funded via a partial disclaimer by the decedent’s sole heir that failed to qualify under section 2518(b)(4) because of the heir’s contingent-remainder interest in the trust. The dissenting judge argued the annuity and remainder interests were severable and, therefore, the disclaimer as to the annuity interest should have qualified. In addition, the entire court agreed in favor of allowing an estate tax charitable deduction for amounts disclaimed directly to the family foundation.  MORE »

The IRS has issued guidance that updates Rev. Proc. 2006-48 and identifies circumstances under which the disclosure on a taxpayer's return with respect to an item or a position is adequate for the purpose of reducing the understatement of income tax under IRC section 6662(d) and for the purpose of avoiding the preparer penalty under section 6694(a).  MORE »

In a January 24 statement, the IRS has extended its Art Advisory Panel for a period of two years. The Panel assists the IRS by reviewing and evaluating the acceptability of property appraisals submitted by taxpayers in support of the fair market value claimed on works of art involved in Federal Income, Estate or Gift taxes in accordance with sections 170, 2031, and 2512 of the Internal Revenue Code.  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 2008-9 indicates the applicable federal rate under section 7520 for February 2008 is 4.2%; down 0.2% from the January rate of 4.4% and down 0.8% from the December rate of 5.0%.  MORE »

The Congressional Research Service has updated its report on the requirements and application process for charities and other entities that seek to obtain section 501(c)(3) status.  MORE »

The Service has issued procedures for issuing determination letters and rulings on the exempt status of organizations under IRC §§ 501 and 521 (other than retirement plans). Generally, the Service issues these determination letters and rulings in response to applications for recognition of tax exempt status and revocation or modification of determination letters or rulings. This revenue procedure also provides guidance on the exhaustion of administrative remedies for purposes of declaratory judgment under § 7428.  MORE »

The Service has ruled that a married couple can reform two charitable remainder trusts to permit the assignment of their income interests to the charitable remaindermen. The couple will receive income tax and gift tax charitable deductions for the present value of their remaining income interests and, based on the husband's release of his retained power to revoke the wife's successor unitrust interest, the gift of the successor unitrust interests will also qualify for the gift tax marital deduction under § 2523(g).  MORE »

The Service has ruled privately that the early termination of a testamentary charitable remainder annuity trust, to settle extensive litigation involved in the probate of the Will and subsequent administration of the CRAT based on allegations the income recipient of the trust misappropriated estate assets, is not an act of self-dealing or taxable expenditure.  MORE »

The Congressional Research Service has updated its report on qualified distributions from Individual Retirement Accounts that expired on December 31, 2007 by reviewing currently proposed bills that would extend the provision.  MORE »

In a January 7 news release, Yale University has announced its decision to increase the payout from its $22.5 billion endowment fund during the upcoming fiscal year by 37% to an estimated $1.15 billion. The distributions will be used to expand student financial aid, recruit students of modest means, and, possibly, expand the size of Yale's undergraduate student body. Sen. Grassley, in a separate statement, praised the decision pointing out that Americans subsidize endowments by tax-exemption and, therefore, deserve a public benefit in return.  MORE »

In what it describes as "purely a substantiation case," the Tax Court in summary opinion has upheld a taxpayer's claimed cash and noncash charitable contribution deductions and denied his deductions for unreimbursed employee expenses.  MORE »

The IRS has issued rules under IRC §170(f)(17) for substantiating lump-sum charitable contributions made through the Combined Federal Campaign (CFC) or a similar program (e.g., a United Way Campaign) as required by section 1217 of the Pension Protection Act of 2006. To substantiate a deduction, § 170(f)(17) requires a taxpayer to maintain a bank record or a written communication from the donee showing the name of the donee organization, the date of the contribution, and the amount of the contribution. Regulations under this section are forthcoming.  MORE »

In Rev. Proc. 2008-3, the IRS has updated the list of areas of the code for which it will not issue private letter rulings or determination letters.  MORE »

A federal grand jury has handed down a 37-count indictment against the head of a religious organization and related parties for conspiracy to defraud the United States and agencies thereof. The numerous allegations include a fraudulent charitable contribution and kickback scheme that resulted in claimed deductions of up to 20 times the amount actually contributed, international money laundering, mail and wire fraud, and filing false income tax returns.  MORE »