In a news story published on its website, the United Church of Christ has announced it has received notice from the IRS that it is initiating a church tax inquiry "because reasonable belief exists that the United Church of Christ has engaged in political activities that could jeopardize its tax-exempt status." The inquiry stems from U.S. Sen. Barack Obama's address at the UCC's 2007 General Synod in June of 2007.  MORE »

The IRS has issued interim guidance and requested comments on the treatment under IRC § 67 on investment advisory costs and other costs subject to the 2-percent floor under § 67(a) that are bundled as part of one commission or fee paid to the trustee or executor ("Bundled Fiduciary Fee") and are incurred by a trust other than a grantor trust (e.g., a nongrantor charitable lead trust) or an estate.   MORE »

In this age of word processing and photoshopping, what’s to prevent a “creative” taxpayer from manufacturing a charitable contribution receipt from a real or fictitious charity and claiming a charitable deduction in the amount of their choice? Is that what the Tax Court thought when denying a couple’s $18,000 cash donation?  MORE »

A few years ago, insurance advisers Michael Brink and Bryan Clontz wrote an article for the Planned Giving Design Center that discusses ten creative charitable uses of life insurance and their tax implications in planned giving. It has now been updated for current law, so we thought you might enjoy taking another look.
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The Internal Revenue Service has announced the launch of a simple online filing system that small tax-exempt organizations can use to comply with a new law requiring them to file an annual return. It has also launched a disclosure website where the public can view a particular organization's e-Postcard.  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 2008-11 indicates the applicable federal rate under section 7520 for March 2008 is 3.6%; down 0.6% from the February rate of 4.2% and down 0.8% from the January rate of 4.4%. Note: The original announcement by IRS incorrectly stated the March 7520 rate at 4.0%  MORE »

The Service has ruled privately that a transfer of assets from one private foundation to another pursuant to a court approved settlement agreement will not jeopardize the tax-exempt status of either foundation, will not subject the transferring foundation to a private foundation termination tax under section 507, and will not violate any of the private foundation excise tax rules under sections 4941 - 4945.  MORE »

The Service has ruled privately that a division of a charitable remainder unitrust with flip provision into two separate trusts, followed by the contribution by the income recipient of the entire income interest of one of the trusts to the charitable remainderman, will result in a merger of the income and remainder interests of the transferred trust in the hands of the remainderman, will entitle the income recipient to income and gift tax deductions for the present value of remaining income interest as determined on the date of transfer, and will not cause the income recipient to realize any undistributed gains attributable to the transferred income interest.  MORE »

The Service has revoked the tax-exempt status of a section 509(a)(3) supporting organization because 1) it failed to pass any of the three prongs of the relationship test; 2) it failed to support a public charity; and 3) it failed to pass the operational test by conducting any activity in furtherance of its exempt purpose.  MORE »

The Service has issued two new private letter rulings to educational organizations that seek to invest their charitable remainder trusts in shares of assets held in their endowment funds. As in 39 previously issued similar rulings, the Service has held that holding or redemption of such shares will not produce unrelated business income to the charitable remainder trusts.  MORE »

In a letter to Treasury Secretary Paulson, a bipartisan group of Texas legislators have expressed concern that Proposed Rulemaking regarding Type III Supporting Organizations will make it impossible for "historical" supporting organizations to meet the functional integration test. The group also opposes the proposed five percent mandatory distribution rule for non-functionally integrated organizations on the basis it would force untimely distributions thereby hurting long-term philanthropic support.  MORE »

The IRS has issued Notice 2008-13 which provides guidance regarding implementation of the tax return preparer penalty provisions under section 6694 and the related definitional provisions under IRC section 7701(a)(36), as amended by the Small Business and Work Opportunity Tax Act of 2007  MORE »

AICPA has issued guidance for members who prepare fiduciary income tax returns to comply with the Supreme Court's decision in Knight v. CIR, aff'ing Rudkin Testamentary Trust v. CIR, with respect to deducting trust administrative costs on 2007 Form 1041. With respect to charitable trusts, Form 1041 is required for all nongrantor charitable lead trusts and grantor lead trusts that do not elect alternate reporting. Form 1041 is no longer required for charitable remainder trusts that have unrelated business taxable income.  MORE »

The IRS has issued a Fact Sheet in which it reviews the variety of tools at its disposal to make certain that tax-exempt organizations comply with federal law designed to ensure they are entitled to any tax exemption they may claim. These include correspondence examinations, field examinations, and compliance checks.  MORE »

The IRS has issued a Fact Sheet in which it describes the process by which complaints (also called "referrals") alleging the abuse of the tax exempt status by a organization can be made to the IRS and how they are handled.  MORE »

In response to changes brought about by The Pension Protection Act of 2006, the Service has issued a substantially revised Form 5227, Split-Interest Trust Information Return, for reporting by charitable remainder trusts, pooled income funds, charitable lead trusts for the 2007 tax year. The good news is that split-interest trusts no longer have to file Form 1041-A. That bad news is the estimated time needed to maintain records for, learn about, and complete Form 5227 is 136 hours and 50 minutes!  MORE »

At a February 4 press briefing, the Treasury released the "General Explanations of the Administration's Fiscal Year 2009 Revenue Proposals," also known as the "Blue Book." With respect to charitable giving, the administration proposes to make permanent a number of previous incentives including: tax-free withdrawals from IRAs for charitable purposes, the enhanced charitable deduction for contributions of food, the enhanced deduction for corporate contributions of computer equipment for educational purposes, increased limits on contributions of partial interests in real property for conservation purposes, and the basis adjustment to the stock of S corporations that contribute appreciated property. A new proposal would replace the current two-tier 2%/1% excise tax applicable to the net investment income of private foundations with a single tax rate of one percent.  MORE »