In February of this year, Congress passed the Economic Stimulus Act of 2008. Included in this bill is a provision for up to 130 million taxpayers to receive tax rebates. In this special report, Robert Sharpe, Jr. and Barlow Mann from The Sharpe Group discuss what they believe to be a tremendous opportunity and advantage for taxpayers to donate their rebates to charity.
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Private letter rulings dealing with the early termination of charitable remainder trusts with the division of income and remainder interests between income beneficiaries and charitable remaindermen have become so commonplace that we’re sure most PGDC readers simply ignore them. THIS ONE IS WORTH READING!
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The Service has ruled privately that a taxpayer who is an individual member of a cooperative and elects to direct the cooperative to transfer amounts redeemable as patronage dividends or as rebates earned on cooperative credit card purchases to charity can deduct such amounts under § 170.

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The Service has ruled privately in two companion rulings that a husband and wife can terminate a 10% net income with makeup provision charitable remainder unitrust by selling their income interests to the charitable remainderman for an amount equal to the present value of their remaining actuarial income interests and that such sale will not be deemed a prohibited act of self-dealing.

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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 2008-24 indicates the applicable federal rate under section 7520 for May 2008 is 3.2%; down 0.2% from the April rate of 3.4% and down 0.4% from the March rate of 3.6%.

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Although the IRS last week canceled a public hearing in Washington, D.C. on proposed regulations for the new unrelated business income tax rules applicable to charitable remainder trusts, two firms from the State of Washington have asked for transitional relief in the form being able to elect the lesser of the taxes under the old and new law in order to allow CRTs time to restructure their investments.

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The Internal Revenue Service recently released for public comment the draft instructions to the 2008 Form 990, which is the return most tax-exempt organizations must file annually. The IRS seeks public comment on the draft instructions to ensure that the final instructions meet the needs of the tax-exempt community. The public comment period will run until June 1, 2008.

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Under current tax law, churches that benefit from §501(c)(3) tax-exempt status may not participate in political campaign activities. Churches are also subject to applicable restrictions under campaign finance laws. In this report, the Congressional Research Service discusses these laws, recent IRS inquiries into church political activity, and legislation to repeal the tax code's prohibition.

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Writing on behalf of the Estate & Gift Taxation Committee of the Association of the Bar of the City of New York, Michael I. Frankel has pointed out inconsistencies in private letter rulings regarding the calculation of income interests for net income charitable remainder unitrusts that propose to terminate early. Some rulings indicate that "one" reasonable method of calculating the actuarial value of the income interest use the lower of the stated percentage distribution rate of the NIMCRUT or the Code § 7520 rate in effect for the month of termination while others use only the Code § 7520 rate in effect for the month of termination. The bar urges IRS to issue guidance that uses the same method that is used to value income interests when a NIMCRUT is created.  MORE »

At its April 2, 2008 meeting, the ACGA Rates Committee has recommended and the ACGA board approved a new, lower schedule of gift annuity rates for immediate gift annuities, effective on July 1, 2008. In addition, the deferred gift annuity rates which became effective on July 1, 2006 will also be lower.  MORE »

A charitable gift annuity is described generally as a transaction in which an individual transfers cash or property to a charitable organization in exchange for the charity's promise to make fixed annuity payments to one or two life annuitants. This comprehensive report discusses the origin of gift annuities, how they are designed and regulated, how charitable contribution deductions are determined, taxation of distributions to annuitants, taxation of gift annuities to issuing organizations, and creative planning opportunities for donors.  MORE »

In two recently issued private letter rulings, the Service has held that a special independent trustee of a charitable remainder unitrust in its sole discretion can allocate a portion of the annual unitrust amount to any of the trust's income recipients and any organization qualified under sections 170(c), 2055(a), and 2522(a). In addition, the trustor will retain the power to substitute the charitable remainderman, provided that at least one-third of the remainder interest is distributed to public charities, and will retain the power to substitute the special independent trustee.

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Texas Senators Kay Bailey Hutchison and John Cornyn have sent a letter to Treasury Secretary Paulson expressing their concerns about possible unintended consequences that may result from proposed rulemaking to historical supporting organizations. The letter comes in the wake of similar concerns expressed by other Texas legislators.  MORE »

Treasury Assistant Secretary for Legislative Affairs Kevin I. Fromer has thanked Oklahoma lawmakers for their suggestion that a proposed 5% minimum annual payout for non-functionally integrated Type III supporting organizations be reduced to 3.5%.  MORE »