In a March 14, 2008 letter to acting IRS Commissioner Linda Stiff, Senator Joseph I. Lieberman (I-CT) has expressed concerns and asked the Service to explain the basis on which it formed a "reasonable belief" that the United Church of Christ violated the Internal Revenue Code's ban on partisan electioneering by churches when Sen. Barack Obama addressed the UCC's 50th General Synod in Hartford, Connecticut on June 23, 2007. Lieberman also asks the Service to clarify its "inadequate" public guidance on the permissibility of candidate appearances at churches.  MORE »

In response to his November 14, 2007 testimony before the Senate Finance Committee, noted estate and philanthropic planning lawyer Conrad Teitell of Cummings & Lockwood, LLC answers follow-up questions posed by the committee and urges the Senate to advance legislation to reform the federal estate tax "sooner than later"..."so certainty will reign for the foreseeable future."  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 2008-20 indicates the applicable federal rate under section 7520 for April 2008 is 3.4%; down 0.2% from the March rate of 3.6% and down 0.8% from the February rate of 4.2%.  MORE »

The IRS has issued a memorandum that transmits guidelines for processing applications for private foundation status classification under IRC 509(a)(3) for Type I, II, and III Supporting Organizations.  MORE »

Sen. Max Baucus, chairman of the Committee on Finance, and Sen. Chuck Grassley, ranking member, have written to four ministries to urge cooperation with an earlier information request from Grassley. Baucus and Grassley lead the committee with exclusive Senate jurisdiction over tax policy; the ministry inquiry that Grassley launched last November is meant to gauge the effectiveness of certain tax-exempt policies.  MORE »

A group of Oklahoma lawmakers have submitted a letter to Treasury Secretary Paulson expressing their concerns over proposed rulemaking regarding non-functionally integrated Type III supporting organizations by suggesting that Treasury set a minimum annual payout requirement of 3.5% (as compared to the proposed 5%), which they believe is both "significant and sustainable."  MORE »

Treasury Assistant Secretary for Legislative Affairs Kevin I. Fromer has responded to Texas congressional members regarding their concerns over proposed rulemaking that would require "non-functionally integrated" Type III supporting organizations to distribute at least 5% of their fair market value annually and other provisions that would make it "impossible" for historical supporting organizations to meet the functional integration test."

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The IRS has announced a closed meeting of the Art Advisory Panel will be held on April 2 and 3, 2008, beginning at 9:30 a.m. in the Franklin Court Building, 1099 14th Street, NW., Washington, DC. The agenda will consist of the review and evaluation of the acceptability of fair market value appraisals of works of art involved in Federal income, estate, or gift tax returns.  MORE »

The Service has approved a court ordered reformation of a charitable remainder unitrust to correct a drafting error, finding that no self-dealing occurred. The parties had intended to create a standard payout format unitrust; however, the trust inadvertently included a net income with makeup provision. The court approved the reformation ab initio pursuant to a favorable IRS ruling.
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Treasury has issued proposed regulations that provide guidance under IRC § 664 on the tax effect of unrelated business taxable income on charitable remainder trusts for tax years beginning in 2007. The proposed regulations clarify that, consistent with § 1.664-1(d)(2), the excise tax imposed upon a charitable remainder trust with UBTI is treated as paid from corpus and the trust income that is UBTI is income of the trust for purposes of determining the character of the distribution made to the beneficiary. Notice of a public hearing on these proposed regulations is also provided.

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According to a study by New York University - Stern School of Business finance professor David L. Yermack, corporate CEOs may be taking advantage of inside information to maximize charitable deductions for company stock transferred to their own private foundations. In "Deduction Ad Absurdum: CEOs Donating Their Own Stock to Their Own Family Foundations", Dr. Yermack studies 151 charitable gifts of at least $1 million noting that such gifts, which are not subject to strict insider trading rules, are often followed by sharp declines in the price of the donated stock. He even suggests CEOs may be backdating their gifts in a way similar to recent stock option backdating practices in collusion with the charitable donee and others in order to increase their personal deductions.  MORE »

The Service has ruled privately that an early termination of a charitable remainder unitrust by means of a sale of the income recipient's remaining income interest to the charitable remaindermen will not be a prohibited act of self-dealing, taxable expenditure, or subject the trust to a private foundation termination tax. The trust was created by a family limited partnership, bears an 11% payout rate, standard payout format, and will terminate 20 years after its creation or upon the earlier death of the survivor of the two partners of the FLP. The sale was approved based on a physician signed affidavit that neither of the partners have a physical condition that would decrease their normal life expectancy.  MORE »

The IRS has released a revenue ruling that confirms many of our hopes regarding charitable gifts of appreciated property by a Subchapter S corporation. Normally a shareholder's income tax deduction for an S corporation's business losses is limited to the shareholder's basis in the corporation's stock. The IRS has now confirmed that charitable gifts can qualify for better tax treatment. Click through to read Chris Hoyt's analysis.  MORE »