Lerner Again Takes Fifth

Friday, March 7, 2014

Legislative

IRS

On Wednesday, the House Oversight Committee resumed hearings that commenced ten months ago on the alleged targeting of applicants for 501(c)(4) status based on their political orientation. Former EO Director Lois Lerner was recalled to testify, but she again asserted her Fifth Amendment privilege against self-incrimination.

Comment Period Closes on Changes to NII Regs

Friday, March 7, 2014

IRS

Only a small handful of comments were submitted on proposed changes to the recently finalized regulations implementing Section 1411, which imposes a 3.8% Medicare surtax on "net investment income." Among these, investment manager Kaspick & Company urged the Treasury and IRS to abandon the so-called "simplified" method of allocating NII to distributions from a charitable remainder trust.

Tax Court Denies Rehearing in Mountanos

Friday, March 7, 2014

In Mountanos v. Commissioner, the Tax Court rejected the taxpayer's motion for a rehearing of its earlier decision denying carryforward deductions for a conservation easement, saying the motion was "a calculated maneuver to avoid the accuracy-related penalty."

Charities Object to Obama's Limitation of Charitable Deduction

Friday, March 7, 2014

Legislative

President Obama has recommended in his Budget Proposal that itemized deductions be capped at 28%, thus limiting the charitable income tax deduction (see our earlier commentary).

In response, the Alliance for Charitable Reform, a consortium of charities, stated:

“'We are disappointed that the President has, for at least the seventh time, proposed to cut the charitable deduction,' Sandra Swirski, executive director of ACR, said. 'Capping the charitable deduction at 28 percent could cost the nonprofit sector up to $9 billion a year, dealing a big blow to our charities and our economy. The charitable deduction is a lifeline not a loophole and we strongly urge the President to reevaluate his stance on cutting the deduction.'

The President’s proposal also includes the Buffett Rule which imposes a minimum 30 percent tax on incomes beginning at $1 million, but does allow for a charitable deduction providing credit against taxes owed. However, the charitable deduction in the Buffett Rule is also capped at 28 percent."

The Council on Foundations and IS have not yet formally objected to proposed reduction.

Case Study: Using a Deferred CGA to Increase Income

Thursday, March 6, 2014

By using a Deferred Charitable Gift Annuity, the Donor is able to defer capital gain taxes, diversify her portfolio, and increase her lifetime cash flow for retirement. The Donor also shifts investment risk to the charity while creating a legacy to support causes that are meaningful to her.