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Charitable Giving Answer Book
July 21st, 2009
Almost as long as the U.S. Constitution has permitted the taxation of income, Congress has provided some form of relief for taxpayers who make charitable contributions. An often-stated reason for such tax relief is to encourage the provision of social services by private charities. While the concept of providing a tax deduction for charitable contributions is simple, the rules are complex; applying these rules on a day-to-day basis thus presents a number of challenges. The Charitable Giving Answer Book meets these challenges by tackling a host of both common and hot and emerging issues. It provides quick answers to tough planning and compliance questions that frequently challenge practitioners whether they are estate planners, consultants to philanthropists, or those who manage and consult charitable organizations. The practitioner-preferred format in the Answer Book saves time for the busy professional. To help facilitate fast and effective research on complicated questions that need extra attention, citations are included to federal statutes, regulations, rulings, and cases that control whether a particular charitable contribution is deductible, nondeductible, or only partially deductible. Highlights of the 2009 edition include: * Updated information regarding legislation contained in the Pension Protection Act of 2006 (PPA) and Katrina Emergency Tax Relief Act (KETRA) * How the IRS is treating political activity within charitable organizations * A discussion regarding participation in prohibited tax shelter transactions and required disclosures * Temporarily suspended charitable deduction limitations (§1400S) * Updated model trust forms for Charitable Remainder Trusts * What is a charitable contribution? * What are the various limitations on deductibility of charitable contributions, both for individual and corporate taxpayers? * How are contributions of different types of property treated? * Is a taxpayer entitled to a deduction if he or she receives a benefit in exchange for a payment to charity? * How must a charitable trust be structured to ensure that the donor (grantor) is entitled to a deduction? * How can a donor obtain a tax deduction for making a contribution of a conservation easement? * * * Includes a discussion of case law pertaining to easements * Can a donor make a contribution and still retain control over how the funds will ultimately be used? * Updated information regarding supporting organizations and donor-advised funds * How must charitable contributions be documented? Includes a discussion of newly enacted substantiation requirements
About the Author
Catherine W. Wilkinson is a certified public accountant, practicing in the tax group of the Washington, D.C.-based law firm of Steptoe & Johnson LLP. Ms. Wilkinson received her MBA in accounting and taxation from Indiana University. Ms. Wilkinson provides tax planning and advice to tax-exempt organizations with respect to qualification and state regulatory issues, unrelated business income and participation in partnerships and business ventures, executive compensation, lobbying and political activities. She also advises charitable organizations in the development and operation of fundraising programs; establishing and maintaining planned giving programs, including charitable gift annuities, pooled income funds, and use of split-interest trusts, private foundations and other deferred giving arrangements; and record keeping and reporting in the context of contributions, capital campaigns, direct mail solicitations, planned giving and special events. She is a contributing author of the chapter on Section 501(c)(3) Organizations in the 403(b) Answer Book, 6th Edition, published by Aspen Publishers. Ms. Wilkinson advises tax-exempt organizations, with respect to executive compensation and benefits. This advice includes use of incentive and performance-based compensation arrangements and deferred compensation; stock options, other forms of equity compensation and phantom stock plans; and compensation paid in connection with a change in control. In addition, Ms. Wilkinson represents tax-exempt organizations and their employees in complex federal and state tax audits and investigations. Jean M. Baxley is a tax attorney in the Washington, D.C. office of Steptoe & Johnson LLP. She received her LL.M. in Taxation from Georgetown University Law Center in 1997. Ms. Baxley counsels corporate clients with respect to federal tax planning and tax controversy matters, with a particular focus on federal income tax audit and controversy work. She assists clients throughout the audit process, helping clients respond to IRS information and document requests; defends against IRS challenges, including challenges to tax-advantaged transactions; rebuts the IRS s assertion of penalties; and pursues tax refund litigation. Ms. Baxley also renders tax planning advice, provides tax opinions, and prepares letter ruling requests. Ms. Baxley’s primary areas of experience include insurance company and insurance product taxation; the taxation of financial institutions and products, tax-advantaged transactions and economic substance issues, accuracy-related penalties and defenses to penalties, certain disclosure and reporting requirements (e.g., the disclosure rules of section 6011 and the list maintenance rules of section 6112), and privilege and work product issues.
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Posted in Charitable Giving, Tax Deductible Donations | 
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No Comments »Charitable Giving Rules
June 12th, 2009Charitable Giving Rules
Question: Why are charitable organizations asking for your credit card information when they call for donations?
I don’t give to a lot of organizations. But lately when they call and you pledge money, they want you to give them your credit card number so they can “get the money to work faster”. Isn’t that the first rule of thumb: Never give your credit card number (or bank numbers or SSN) to anyone that calls you. They act disappointed and SHOCKED that you do feel comfortable doing that. Are they nuts or am I?
Answer: No, you're not nuts. NEVER give your personal information to anyone over the phone. I always ask them to send me their info so I can look it over. People actually sputter and say we don't do that, to which I say then you must not be legit. You can never be too careful.
Will new tax rules about charitable deducations affect us at The Salvation Army?
Posted in General Deductions | Tags: Charitable, Charity, Giving, irs, irs charitable giving rules, rules | No Comments »Charitable Giving Tax Rules
February 26th, 2007Charitable Giving Tax Rules
As the end of the year approaches, it’s always a good idea to consider what tax-saving initiatives you might commit to before Dec. 31 in order to ensure you get the most benefit for the 2006 tax year.
To that end, I would recommend 10 key strategies in relation to your investments that you should consider. Keep in mind that these plans should be thought out as soon as possible, since they take some planning and proactive action on your part to set up.
Tip 1. Postpone any asset sales that would result in capital gains until 2007. By doing so, you’ll avoid paying income tax on any gains until you file your 2007 return in 2008. Delayed expenses are almost always a good idea.
Tip 2. Record losses on securities and stocks held outside of any registered plans. This is a significant advantage as tax laws permit the current year’s losses to offset the current year’s capital gains. Additionally, remaining losses can be carried back and put against capital gains in any of the preceding three years or carried forward indefinitely. It’s an important point to note that in order to benefit from a tax loss in this way, you are not allowed to purchase the same security again until 31 days after the sales. And that applies to both non-registered and registered accounts.
Tip 3. Research and Invest in a resource tax shelter. Resource tax shelters allow you to deduct the full value of your investment against other income in 2006. Resource tax shelters are fully endorsed by Canada Revenue Agency, whereas many other tax shelters present the risk of being declared invalid, whether or not they have a tax number.
Tip 4. If you are considering a donation to a registered charity, give stock instead of cash. This creates an exclusive tax break. Under normal circumstances, half of a capital gain is taxed as income; under new regulations, any capital gain created by a donation of securities or stocks to a charitable organization is exempt from tax.
Tip 5. Complete an RESP contribution before the end of the year to qualify for the Canada Education Savings Grant. This grant is up to a maximum of $400 or 20 per cent of your contribution up to $2,000 for the 2006 tax year. If you are just establishing an RESP, it’s important to keep in mind that you’ll require a social insurance number for the child to get the grant. Obtaining a social insurance number can take several weeks to obtain.
Tip 6. If your plan is to make a spousal RRSP contribution, do it before the end of the year, as it will shorten the waiting period for withdrawal. Your spouse will be able to access the funds in 2009 without attribution to you. If you don’t make the contribution until 2007, the three-year waiting period won’t end until 2010.
Tip 7. If you have an RRSP and you are turning 69 in 2006, you are required to convert your RRSP into a RRIF by the end of the year. When establishing your RRIF, you can set up the withdrawal schedule on your younger spouse’s age, which should minimize the mandatory withdrawals and taxable income they create in subsequent years.
Tip 8. If you are required to set up a RRIF in 2006 and you still have income from employment, you are able to make an RRSP contribution and enjoy the benefit of a tax refund the following April. The only caveat is that your contribution must be made before your RRSP ceases to exist at the end of the year. This can by somewhat difficult to do properly, since you are not meant to make contributions to you RRSP on this year’s employment income until 2007. In spite of that, the penalty you will pay for over-contribution will be relatively small when measured against the income tax refund you will receive.
Tip 9. If you are past the age of 69 and still have employment income, you can still defer taxes by contributing to a spousal RRSP. This is a valid approach until the end of the year for spouses who turn 69 in the current tax year.
Tip 10. Avoid investment in mutual funds in your non-registered account prior to year-end otherwise you’ll be stuck paying taxes on gains you didn’t benefited from. This scenario arises because Canadian tax rules require that all capital gains within a mutual fund must be attributed to those holding the mutual fund units at year-end.
While not an exhaustive list, following even a couple of these tax planning tips will ensure you pay the lowest possible taxes possible.
About the Author:
Michael Lee-Smith has been investment planning for over a decade. Learn more about strategic investments at
http://www.advicebuy.info
or visit Michael’s personal homepage at
http://www.yourwork.info/
to learn more about his experience.
Article Source: ArticlesBase.com – Top 10 Tax Planning Tips for Investors
Important Tax Law that must be understood and adhered to.
Irs Charitable Giving Rules
February 5th, 2006Irs Charitable Giving Rules
Question: New IRS charitable giving rules for 2006 or 2007? Can I still e-file?
Do the new IRS rules under the Pension Protection Act of 2006 prohibits donors from declaring contributions to charitable organizations unless they can produce records of the transactions impact 2006 filing, or is it for 2007? Also, either way, if I have the records of proof, but file electronically, do I need to do anything, or do I merely hold on to the records for a potential audit? In other words, can I still e-file, or do I need to mail my return in with the documentation of the donations?
Answer: yes you can still e file the only thing is that youll have to keep those receipts from the organizations just in case you do get audited. If you dont get a receipt you can also use a canceled check or some other document that shows you did in fact contribute.
IRS TAX TIPS: Charitable Contributions (ASL, CAPTIONS, & AUDIO)
Posted in General Deductions | Tags: Charitable, Charitable Giving, Charity, irs, rules | No Comments »