The Board of Directors of the American Council on Gift Annuities (ACGA), at a called meeting on December 29, 2008, approved a recommendation from the Rates Committee to reduce the expected return assumption from 5.75% to 5.25%. A new rate schedule has been developed reflecting this change and is now available for annuities issued on February 1, 2009 through June 30, 2009.  MORE »

The Service has ruled privately that a public charity's purchase of a commercial annuity to reinsure its payment obligation under a charitable gift annuity contract will not be treated as commercial insurance under section 501(m), nor will any benefits received by the charity under the contract (including any lump sum benefits under a guaranteed cash refund feature) be considered unrelated business income to the charity.  MORE »

Writing as a volunteer on behalf of the American Council on Gift Annuities and the National Committee on Planned Giving (now the Partnership for Philanthropic Planning), Conrad Teitell has prepared and delivered a letter and draft bill to the Senate and House leadership urging the Congress to enact legislation to expand current law that allows qualified individuals to roll over to charities from their IRAs tax-free up to $100,000 in 2009. The groups ask that in response to the troubled economy and as part of the stimulus bill that the $100,000 ceiling be eliminated, that rollovers to life-income plans be authorized and that the law be made permanent.  MORE »

According to an online report by the Chronicle on Philanthropy, the American Council on Gift Annuities on December 29th voted to urge charities that issue charitable gift annuities to lower both the annuity rates they pay annuitants and the amount of interest that assets in gift annuities are expected to earn annually.  MORE »

For purposes of determining the present value of an annuity, an interest for life or a term of years, or a remainder or a reversionary interest, Revenue Ruling 2009-01 indicates the applicable federal rate under section 7520 for January 2009 is 2.4%; down 1.0% from the December rate of 3.4% and down 1.2% from the November rate of 3.6%. In addition, the deemed rate of return for transfers during 2009 to pooled income funds that have been in existence for less than three taxable years is 4.8%, unchanged from the 2008 deemed rate.  MORE »

On January 1, 2009, the National Committee on Planned Giving will become the Partnership for Philanthropic Planning. The new name reflects a broader mission and constituency for an organization that has been serving the charitable planning community since 1988.  MORE »

Yesterday, the Planned Giving Design Center reported incorrectly that H.R. 7327, the Worker, Retiree and Employer Recovery Act of 2008, included a provision that would enable plan participants to recontribute to their retirement accounts the amount they were required to withdraw in 2008. In fact, that provision is included in proposed legislation introduced on December 8, 2008 by Senator Olympia J. Snowe (R-Maine). The full text of the Retirement Account Distribution Improvement Act of 2008 can be found at http://www.thomas.gov/cgi-bin/query/z?c110:S.3719: We apologize for our error.

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Congress has passed and sent to the President for signature H.R. 7327, the Worker, Retiree and Employer Recovery Act of 2008, a bill that places a one year moratorium on required minimum distributions from Individual Retirement Accounts and defined contribution plans for 2009. Although the intent of the legislation is to give retirees an opportunity to recoup financial losses suffered in the last year, it may adversely affect some charitable IRA rollovers.

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A magistrate judge in the U.S. District Court for Colorado has granted a plaintiff's motion to compel the IRS to produce a "matrix" which is a compilation of valuation data on thirty-five sales of real property subject to conservation easements. Plaintiffs argued the matrix and identity of the additional properties would reveal the analysis and methodology used by the IRS to determine the value of Plaintiffs' easements and enable Plaintiffs to bear their burden of rebutting the valuation made by the IRS and putting forth the appropriate valuation. The court agreed.  MORE »

The Ninth Circuit Court of Appeals has affirmed the Tax Court's decision affirming the disallowance of deductions petitioners-appellants claimed for tuition and fees paid to their children's religious day schools.  MORE »

The Service has ruled privately that a testamentary partial assignment of an IRA to three charities will not be a deemed transfer within the meaning of section 691(a)(2) and that only the charities will include the amounts of IRD distributed to them in their gross income.  MORE »

In a legal memorandum, the Service has determined a testamentary trust that was named as the beneficiary of a decedent's IRA cannot claim an income tax deduction under section 642(c) for payments it made to charities. The trust was to pay a percentage of the trust property to the decedent's children and to several charities; however, it failed to meet the regulatory definition of a designated beneficiary trust under section 401(a)(9). Although the trust was subsequently modified by court order to comply, the Service determined the purpose of the modification was to permit the trust to deduct payments made to charities. Citing a revenue ruling and court decision, the Service concluded that since the modification was not made as the result of a conflict, the payments to the charities are not considered to be made under the governing instrument and, therefore, are not deductible.  MORE »

In emailed Chief Counsel Advice pursuant to a pending case, the IRS reviews the contemporaneous written acknowledgment requirements for gifts of conservation easements under section 170(f)(8)(A).  MORE »

The IRS has ruled privately that a transfer by taxpayer to a charity in exchange for a charitable gift annuity will be deductible for income and gift tax deduction purposes and will not be barred by § 170(f)(10)(A) (relating to split-dollar life insurance, annuity and endowment contracts). In this case, the charity will use a portion of the amount transferred by the donor (in the form of a single premium) to purchase a commercial annuity contract to cover its obligations under the gift annuity agreement. The commercial contract will include an option that returns a portion of the premium paid by the charity to it in the event the annuitant dies prior to the aggregate payments made by the insurer equaling or exceeding the premium paid.

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For purposes of determining the present value of an annuity, an interest for life or a term of years, or a remainder or a reversionary interest, Revenue Ruling 2008-53 indicates the applicable federal rate under section 7520 for December 2008 is 3.4%; down 0.2% from the November rate of 3.6% and down 0.4% from the October rate of 3.8%.  MORE »

The Internal Revenue Service has issued the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.  MORE »

The Service has denied a proposed supporting organization to a community foundation's application for tax-exempt status based on the fact that neither the donor nor the contribution assets were identified. In the absence of a donor or assets, the Service could not determine the SO would be operated for exclusively exempt purposes and that the disqualified person would not inure or privately benefit through their relationship with the organization. "In effect," the Service said, "you seem to be trying to create a 'prototype' application package in which you can receive favorable determinations for the entities prior to identifying or even finding the donor and determining the non-marketable assets.  MORE »

The Service has ruled privately that an early termination of a charitable remainder unitrust and distribution of trust assets between income and remainder beneficiaries will not result in a prohibited act of self-dealing even though the charitable remainderman is a supporting organization at the time of the transaction and even though the grantor/income recipients are directors of the SO. The ruling is based on the fact a supporting organization is considered a public charity. The Service stated the ruling would not be valid if the remainderman was a private foundation at the time of the transaction.  MORE »

In a complicated fact pattern, the Service has ruled privately that a private nonoperating foundation that receives stock of an S corporation/holding company via an irrevocable trust established by a shareholder/grantor and to which the excess business holdings rules apply will have five years to dispose of the stock that begins on the date the stock is actually transferred from the trust to the foundation.  MORE »

Writing on behalf of the American Council on Gift Annuities and National Committee on Planned Giving, Conrad Teitell of Cummings & Lockwood has requested that Treasury amplify proposed regulations on the substantiation and reporting requirements for cash and noncash charitable contribution deductions by giving guidance and examples for split-interest gifts of income and remainder interests and gifts of life insurance.  MORE »

Writing on behalf of Deloitte Tax LLP, Laura Peebles has suggested that proposed regulations that would require attaching a complete appraisal with Form 8283 in any year in which an income tax charitable contribution deduction is carried over be removed and that including a copy of prior years' Forms 8283 would be sufficient.  MORE »

In response to requests for public comments regarding proposed regulations implementing the redesigned Form 990, Morristown, N.J. attorney Edward Hein has suggested the form be modified to include language that a grantor or contributor is not considered responsible for the loss of public charity status based solely because of a grant or contribution.  MORE »

The IRS on Halloween issued Notice 2008-99 in which it announced its interest in a type of transaction involving the sale of interests in a charitable remainder trust that might result in inappropriate tax avoidance by the trust’s grantor. The notice requires any persons entering into and material advisers who make a tax statement regarding such transactions, as well as charitable remaindermen that participate to disclose the transaction to the IRS. In addition, the Service and Treasury are requesting public comments on how the transaction might be addressed in published guidance.

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The United States District Court for the District of Kansas has denied an estate tax charitable deduction for a testamentary charitable remainder trust based on the fact the trust did not conform to the requirements of section 2055 and a petition to reform the trust was not filed before the 90th day after the last date (including extensions) for filing the estate tax return.   MORE »