The Service has ruled privately that a charitable remainder unitrust can be reformed from inception based on the finding the measuring term does not reflect the trustors' original intent. Of note in this case is the fact the trust was created with the help of the charitable remainderman and the trustors' family members, and without the assistance of a professional tax advisor.  MORE »

In an August 1, 2008 statement, DOJ Deputy Assistant Attorney General John DiCicco comments on a Claims Court ruling that denied deductions and imposed a 40% penalty on a family that sold stock in their business and used a portion of the proceeds to purchase a "Son of BOSS" digital foreign currency tax shelter in an effort to avoid $40 million in capital gains taxes. Under the topic of food for thought, although this case included no charitable component, we wonder if the tax(and penalty)payers' advisors ever presented a charitable remainder trust or other philanthropic planning vehicle for their clients' consideration?  MORE »

In two companion rulings, the Service has ruled privately that a merger of two public charities described in section 501(c)(3) will not result in the revocation of or otherwise adversely affect either organization's continued tax-exempt status as a public charity, will not generate unrelated business taxable income to either organization, and will not adversely affect the support test of either organization.  MORE »

Rep. Robert E. Latta, R-Ohio has introduced H.R. 6675 that, if enacted, would increase the standard deductible mileage rate for people delivering meals to elderly, disabled, and at-risk individuals to 58.5 cents per mile.  MORE »

The Senate Finance Committee has released a comparison of disaster tax relief legislation (S. 3322) introduced by Finance ranking minority member Chuck Grassley, R-Iowa, to the Fair Disaster Tax Relief Act, introduced by House Ways and Means Committee member Ron Kind, D-Wis. Charitable provisions included in the Senate bill include a temporary suspension of limitations on charitable contributions dedicated to Midwestern disaster relief efforts, an increase in the standard mileage rate for charitable use of vehicles and exclusion from income of mileage reimbursements for taxpayers assisting in relief efforts related to the Midwestern disaster, and a general enhanced deduction for donations of food and book inventory.  MORE »

The IRS has issued Rev. Proc. 2008-46 which contains annotated a sample declaration of trust and alternate provisions for a testamentary charitable lead unitrust with payments to one or more charitable beneficiaries for the unitrust period followed by the distribution of trust assets to one or more noncharitable remaindermen.  MORE »

The IRS has issued Rev. Proc. 2008-45 which contains annotated sample declarations of trust and alternate provisions for grantor and nongrantor inter vivos charitable lead unitrusts with payments to one or more charitable beneficiaries for the unitrust period followed by the distribution of trust assets to one or more noncharitable remaindermen.  MORE »

On June 7, 2007, Treasury issued proposed regulations that address the portion of a trust that is includable in a deceased grantor's gross estate under sections 2036 and 2039 in the event the grantor has retained the use of trust property or the right to an annuity or other income payment from the trust for life. Following the comment period and public hearing, Treasury has issued final regulations that are effective July 14, 2008. In addition to amounts includable with respect to GRATs, GRUTs, GRITs and CRTs measured by life, the final regulations address pooled income funds, remainder interests in personal residences and farms, and CRTs measured by a term of years.
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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 2008-43 indicates the applicable federal rate under section 7520 for August 2008 is 4.2%; unchanged from the July rate of 4.2% and up 0.4% from the June rate of 3.8%.  MORE »

The Service has ruled privately that a Real Estate Investment Trust's provision of steam and electricity to the tenants of a commercial office building are a customary service and, therefore, not considered impermissible services rendered to the occupants. Accordingly, rents received by the REIT will not be treated as unrelated business taxable income.  MORE »

The Service has issued a long-awaited revenue ruling in which it addresses two situations in which a charitable remainder trust is divided pro rata into two or more separate trusts. Such divisions are common when the income recipients desire to separate their interests and when joint income recipients divorce.  MORE »

The Service has ruled in technical advice that an organization is properly classified as a supporting organization under section 509(a)(3). At issue was whether the organization was controlled directly or indirectly by one or more disqualified persons. The Service determined it was not even though the foundation managers were disqualified persons with respect to a private foundation that was a substantial contributor to the supporting organization.  MORE »

Lawmakers have introduced legislation that would increase the standard mileage rate for use of an automobile for business, medical, and moving deduction purposes for 2008 and permanently increase such rate for charitable deduction purposes.  MORE »

Writing on behalf of the American Council on Gift Annuities, Lindsay Lapole and Frank Minton have announced the State of New York has issued new reserve requirements for charities that issue charitable gift annuities in New York.  MORE »

The Treasury Inspector General for Tax Administration has issued a report on its Political Activities Compliance Initiative that seeks to educate tax-exempt organizations regarding political campaign intervention, improve internal processes, and detect tax-exempt organizations that are potentially involved in repeated campaign intervention. Although progress has been made, the report concludes that timeliness goals can be improved.  MORE »

The Service has ruled privately that investment units created by a university from its endowment fund for the purpose of investing in charitable remainder unitrusts for which the university serves as trustee are capital assets under section 1221. Accordingly, gain or loss upon the redemption of a unit will be short or long-term capital gain or loss to the unitrust depending on the holding period of the unit by the unitrust.  MORE »

Charitable giving in the United States is estimated to be $306.39 billion in 2007, exceeding $300 billion for the first time in history, according to Giving USA 2008, the yearbook on philanthropy released today by Giving USA Foundation.  MORE »

The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Unfortunately, the rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.  MORE »

The Service has denied tax-exempt status under section 501(c)(3) to an organization that is organized to facilitate contributions of real estate donations to colleges and universities on the basis the organization is not organized exclusively for charitable purposes. In addition, the Service ruled that since all of organization's activities constitute the operation of a commercial activity, it is organized and operated for the primary purpose of carrying on an unrelated trade or business.  MORE »

The Service has ruled privately that a private nonoperating foundation's proposed recapitalization of companies bequeathed to it by its founder will be permitted holdings, and its ownership of 100 percent of the stock of a corporation will not be considered excess business holdings because the  corporation is a functionally related business.

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The Service has ruled privately that a proposed distribution of assets from a testamentary trust to two charitable beneficiaries, that could not otherwise resolve a conflict regarding how income would be distributed and pursuant to a court-approved settlement agreement, will qualify for an estate tax charitable deduction.
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The Service has ruled privately that a private operating foundation's establishment of a financial awards program intended to recognize individuals for their past charitable, scientific, educational or literary achievements do not need pre-approval by the Internal Revenue Service, will not be taxable expenditures by the organization, and will be qualifying distributions.  MORE »

The IRS has approved a judicial reformation of a charitable remainder unitrust to correct a drafting error. The trust was drafted inadvertently as a net income makeup unitrust when a standard payout format was intended. The reformed trust will be treated as a standard unitrust from inception.  MORE »

Treasury has issued proposed regulations that will amend the regulations under section 642(c) to confirm that a provision in a governing instrument of a charitable lead trust or in local law that specifically provides as to the source out of which amounts are to be paid, permanently set aside or used for a purpose specified in section 642(c) must have economic effect independent of income tax consequences in order to be respected for Federal tax purposes. Accordingly, payments to a charity will consist of the same proportion of each class of the items of income of the trust as the total of each class bears to the total of all classes. See § 1.642(c)-3(b)(2).  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 2008-33 indicates the applicable federal rate under section 7520 for July 2008 is 4.2%; up 0.4% from the June rate of 3.8% and up 1.0% from the May rate of 3.2%.  MORE »