A SCRUT can increase the donors' cash flow, defer their capital gain taxes, and provide the desired benefit to charity.

IRS recently published three technical guides outlining the prohibition of private benefit and inurement for Section 501(c)(3) organizations (TG 3-8), foundation classifications (TG 3-27), and compliance requirements for charitable trusts (TG 70).

In the fourth chapter of Visual Planned Giving: An Introduction to the Law & Taxation of Charitable Gift Planning, author Russell James outlines how to keep credible records of all gifts. Documenting charitable gifts is an essential, although less than glamorous, area of charitable planning. A lack of proper documentation can result in a total loss of the charitable deduction even if the taxpayer does not overstate the gift. Gifts of cash under $250 only require a proof of the gift, which can come in the form of a canceled check, credit card statement, or note from the charity. For a gift of cash exceeding $250, the donor must have a note from the charity indicating the amount, and stating no goods or services were provided in return for the gift, or if any were provided, a description and value of the items. The documentation requirements are based on individual, not cumulative, gift amounts.

IRS imposes different documentation requirements for noncash gifts, depending on the size of the gift, and the potential for abuse. These procedures must be complied with strictly, or the taxpayer can lose the entire deduction, even if the valuation of the gift is correct. Gifts of property under $250 must be substantiated with a receipt from the charity with the date, donor, location, and description of the property. Additionally, the donor must have reliable records proving the property's value. For gifts of property over $500, the donor must include the information mentioned, plus Form 8283. Next, for gifts of property over $5,000, other than publicly traded securities, donors must obtain a qualified appraisal. The donor must have in their possession all the above items, and include a summary of the qualified appraisal on Form 8283. Lastly, with gifts of property over $500,000, or gifts of artwork exceeding $20,000, the donor must include the entire qualified appraisal with the return. The lower limit for artwork recognizes the difficulty in valuing artwork, and the potential for abuse.

Mr. James has created a set of 65 videos for his "Complete Charitable Planning Training Series," to help his readers understand Chapter 4 and the entire book.

Using a charitable lead annuity trust, donors can transfer significant assets to charities and heirs, and in doing so, can "zero out" gift and estate taxes.