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More New Tax Legislation

February 15, 2018

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More New Tax Legislation

February 15, 2018

Authored by: Keith Kehrer

While the Bipartisan Budget Act of 2018 (the “Act’) focused on spending and the budget, it did include two provisions impacting charities.

First, the Act amends the recently adopted Section 4968(b)(1), which now imposes a 1.4% excise tax on certain colleges and universities, to clarify that the student portion of the test refers to “tuition-paying” students.

Second, the Act adds new subsection (g) to the excess business holdings rules of Section 4943, often referred to as the Newman’s Own exception (the organization which we understand was behind the proposal). New Section 4943(g) provides an exception for certain holdings of a private foundation which, among other requirements, where the foundation holds 100% of the voting stock at all times during the tax year, the foundation acquires its interest in the business other than by purchasing it (e.g., by gift), the business distributes all of its net operating income for any given

4 Steps for Compliance with the New Disability Claims Procedures

Did you read our post “Work Now, Party Later,” advising you to do just that in response to the new Department of Labor rule governing disability claims procedures? If so—party on! If not, we hope you enjoyed your holiday celebrations, because it is now time to work.

On January 5, the Department of Labor announced its decision that the new disability claims procedure rules will take effect on April 1 of this year. Here is our suggested plan of attack for employers:

Step 1: Review our previous blog post to familiarize yourself with the new rules.

Step 2: Identify which of your plans offer disability benefits.

Remember to check both your ERISA qualified and nonqualified plans.

Step 3. Determine whether you need to amend your plan and/or SPD.

Under the new rules, participants who file a disability claim must receive an expanded explanation of their adverse benefit determination and a notice of their

The Effect of Tax Changes On Transfers from IRAs to Charity

The Tax Cuts and Jobs Act of 2017 (TCJA) eliminated all miscellaneous itemized deductions that are subject to the 2% floor, capped state and local taxes deduction at $10,000, and doubled the standard deduction for single persons to $12,000 and married couples to $24,000.  As a result of this triumvirate of changes, the individual taxpayer who is over age 70½ is now faced with new computation to make to determine how best to report deductions on the Form 1040 beginning this year and a new opportunity, if managed correctly, to maximize deductions and minimize taxable income.

IRC § 408(d)(8) permits anyone who is over age 70½ to transfer up to $100,000 per year from his/her IRA directly to public charities without reflecting the distribution in taxable income on the taxpayer’s Form 1040.  This technique allows the IRA owner to satisfy the taxpayer’s charitable giving and his/her Required Minimum Distribution (“RMD”)

EO Highlights from New Tax Bill

December 21, 2017

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EO Highlights from New Tax Bill

December 21, 2017

Authored by: Keith Kehrer

As we posted, the U.S. House of Representatives and the U.S. Senate passed and sent to the President for signature legislation that makes significant changes to the U.S. tax code.  The changes are the broadest re-write of the U.S. tax code since the 1986 act and could have a widespread impact on tax-exempt organizations and charitable giving.   The following is a very brief summary of the rules impacting exempt organizations and charitable giving:

Rules Impacting Charitable Donations 

  • Increase in AGI Limit. The income-based percentage limit for charitable cash contributions by individuals to public charities increases from 50 percent to 60 percent of Adjusted Gross Income (“AGI”).
  • Itemized Deductions. The standard deduction is increased from $6,350 to $12,000 for singles and from $12,700 to $24,000 for married couples filing jointly.  Thus, fewer individuals will be itemizing deductions, which includes charitable deductions.  Many commentators have speculated this increase in the

NEW TAX CHANGES – WHAT YOU NEED TO KNOW

December 20, 2017

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Today, Congress passed a sweeping tax bill, as widely expected over the last few weeks. The bill passed solely along party lines, with no Democrats voting for the bill.  President Trump is expected to sign the bill into law, shortly.

The changes in the transfer tax laws made by this bill are as follows:

  • The gift and estate tax exemption is doubled beginning January 1, 2018, from $5,000,000 per person to $10,000,000, indexed for inflation.  For 2018, this equals $11,200,000 for individuals and $22,400,000 for married couples. The increase applies to the generation-skipping transfer tax exemption, as well
  • The foregoing increase of the gift, estate, and GST exemptions is set to expire in 2026, when the exemptions would revert to $5,000,000/$10,000,000 figures, adjusted for inflation.  This raises the question of whether, upon such expiration, there could be a so-called claw-back/penalty on any gifts made prior to 2026 which exceeded

More Scrutiny of Donor Advised Funds

December 7, 2017

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More Scrutiny of Donor Advised Funds

December 7, 2017

Authored by: Keith Kehrer

Notice 2017-73, released on December 4, 2017, describes potential approaches that may be taken to address issues raised regarding the use of donor advised funds (“DAF”). The Treasury and IRS are considering developing proposed regulations under § 4967 of the Internal Revenue Code (Code) that would, if finalized, provide that: (1) certain distributions from a DAF that pay for the purchase of tickets that enable a donor, donor advisor, or related person to attend or participate in a charity-sponsored event result in a more than incidental benefit to such person under § 4967; and (2) certain distributions from a DAF that the distributee charity treats as fulfilling a pledge made by a donor, donor advisor, or related person, do not result in a more than incidental benefit under § 4967 if certain requirements are met. In addition, the Treasury Department and the IRS are considering developing proposed regulations that would

Planning and the Death of the Death Tax

On Wednesday afternoon the White House again proposed eliminating the so-called death tax as part of its tax reform plan, but the details remain sparse.  When pressed for specifics Director Cohn simply stated that with the implementation of the administration’s tax plan, the death tax would disappear.

The phrase “death tax” entered the popular lexicon by way of tax reformers wanting to summarize and caricature the several parts of the Federal transfer tax system.

What is the Death Tax?

The death tax could refer to the estate tax alone or to any combination of other taxes that grew out of the estate tax regime.  The modern estate tax was introduced in 1916.  In its current form it imposes a top rate of 40% on transfers above $5,490,000 per person made at death.

After the estate tax was instituted, savvy taxpayers quickly realized that a deathbed gift would avoid the estate

Comparison of Current Tax Rates, Trump Proposed Rates and Republican Blueprint Proposed Rates

While there is considerable uncertainty among wealth planners and tax professionals regarding how the incoming administration will impact the federal tax code, nearly everyone agrees that change is imminent. With that in mind, we have assembled this chart, which compares current tax rates with President-elect Donald Trump’s proposed tax plan, and the House Republicans’ Blueprint plan (released in June, 2016).  Click here.

Treasury Releases Final Program-Related Investment Regulations – Installment # 1

April 25, 2016

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Treasury has released Final Regulations under Section 4944 of the Code providing additional guidance regarding program related investments (“PRIs”). Technically, a PRI is an investment by a private foundation (1) the primary purpose of which is to accomplish an exempt purpose, (2) no significant purpose of the investment is the production of income or the appreciation of property; and (3) no purpose of the investment is to influence legislation or to participate in, or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office.  Classification as a PRI is important because it means the investment will not be considered a jeopardizing investment and the investment is included as a qualifying distribution for purposes of the foundation’s annual minimum distribution obligation.

These Final Regulations provide several new examples of investments that will be classified as PRIs.  It is important to note, however, that these

Will the Senate Vote on Conservation Easements?

August 14, 2014

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the-capitol-4-1225800-mThe America Gives More Act of 2014 (the “Act”) includes several provisions about charitable deductions. Among those provisions are changes to the donations of conservation easements that would make permanent temporary provisions that terminated as of December 31, 2013. The Act would permit individuals and corporations to continue to take a deduction of up to 50% of their adjusted gross income and permit individuals and corporations to carryover the aggregate amount of the deduction for up to 15 succeeding years.

The permanent provisions of Section 170 of the Internal Revenue Code only permit individuals and corporations to take a deduction up to 30% of their adjusted gross income and to carryover the aggregate amount of the deduction for up to 5 succeeding years.

The Act was introduced May 22, 2014 by

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