Teitell to Testify on Behalf of ACGA Regarding Proposed Transfers for Private Annuity Regulations

Teitell to Testify on Behalf of ACGA Regarding Proposed Transfers for Private Annuity Regulations

News story posted in Regulations on 24 January 2007| comments
audience: Partnership for Philanthropic Planning, National Publication | last updated: 18 May 2011


On October 17, 2006, the Treasury and IRS issued proposed regulations that would change the tax treatment of exchanges of property for private annuity contracts. Although the IRS stated that charitable gift annuities would not be affected by the new regulations, Conrad Teitell has drafted a statement in support of this position on behalf of the American Council on Gift Annuities and will testify before the IRS at a public hearing on February 16, 2007.
Statement by American Council on Gift Annuities:

From:      Frank Minton, Chair
               ACGA, Board of Directors

Re:          Reporting of Gain in Gift Annuities
               Proposed Reg. 141901-05

The regulation cited above would require immediate taxation of any gain in property transferred for a private annuity. The gain could no longer be reported ratably over the donor-annuitant's life expectancy.

The notice about this regulation does not propose to change the existing rules regarding ratable reporting of gain in property contributed for gift annuities. However, it requests comments as to whether the change applicable to private annuities should also apply to gift annuities.

If that were to happen, a donor who contributes appreciated property for a gift annuity would have to report all of the taxable gain in the year of the gift. In some instances, the taxable gain would exceed the usable charitable deduction, resulting in an out-of-pocket cost in the year of the gift. This would discourage such gifts.

Silence by the charitable community on this matter might be construed as indifference, which is absolutely not the case. Therefore the ACGA and its sister organization, NCPG, are both submitting statements as to why the proposed rule change should not apply to gift annuities. Arrangements have also been made for oral testimony.

A statement has been drafted on ACGA's behalf by Conrad Teitell, its legal counsel. It sets forth the reasons for continuing existing regulations in Sec. 1.1011-2 with reference to gift annuities. To view the statement, click here: http://www.acga-web.org/IRShearingletterJan07.pdf.

We are not asking ACGA sponsors to take action at this time. However, should that become necessary, we will advise you and provide instructions. Meanwhile, we will keep you informed about developments.

PGDC Editor's Note: The public hearing will be held on February 16, 2007 in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning submissions of comments, the hearing, and/or to be placed on the building access list to attend the hearing, Kelly Banks, (202) 622-0392 (not a toll-free number).

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