Taxation

A donor who inherits an IRA also inherits the ability to use the IRA to make qualified charitable distributions (QCDs), along with the limitations of this gift type.

To make a QCD contribution to charity, the beneficiary of the inherited IRA must be at least age 70 ½ at the time of the QCD. The age of the IRA’s original owner is not relevant, nor is the inheritor’s age at the time of the decedent’s death. The age that matters is that of the donor at the time they make the gift.

The index adjustment uses the average Chained Consumer Price Index for All Urban Consumers (C-CPI-U) for each calendar year with 2022 as the base year. The average for a calendar year is taken from 9/1 of the previous year through 8/31 of the current year. Indexing starts with 2024, so the first adjustment will include 9/1/2021 - 8/31/2023. A fair estimate is that there will be an inflation adjustment of 10% to 15% for that period. If that is correct, the limit on outright QCDs would be between $110,000 to $115,000 and the limit on QCDs to a CGA would be between $55,000 to $58,000 (rounded $57,500 to nearest $1,000).

What is the “Legacy IRA”? Under certain circumstances, a donor can make a one-time tax-free Qualified Charitable Distribution (QCD) from their IRA in exchange for a life income gift. This is a once in a lifetime election, subject to the limitations explained below.

At the end of the year, donors may be frazzled by holiday planning and leave their charitable giving to the last minute. To help ensure that their end of year gifts count for the current tax year, here’s a primer on how to determine gift date. We’ve also included a digital checklist as an additional resource from our experts at Foundation Source with the most important milestones for private foundations throughout the calendar year—including key dates for year-end giving.

For any charity operating a gift annuity program, the question, “In what states do we need to register?” has likely come up (perhaps more than once). That may be closely followed by a declaration “we’re not registering in…” and the naming of one or more states accompanied by horror stories of the level of regulation they impose. Although complying with state gift annuity regulations does not top anyone’s “things I enjoy” list, the desire to avoid a certain state’s regulations can interfere with the success of your program.

Fortunately, a charity can issue in half of the states without being subject to any gift-annuity-specific registration, and if you tack on the 14 states that require only a notice of intent to issue, then the total grows to 39 states. The complexity really comes with the 11 more highly regulated states: Alabama, Arkansas, California, Florida, Hawaii, Maryland, New Jersey, New York, North Dakota, Tennessee, and Washington. While for some organizations their donor base is such that they want to be able to issue gift annuities in all states, for many it will make sense to weigh the cost (in time and dollars) of compliance with the benefit of expected gifts.

The question of where to register and issue should take into account the geographic reach of an organization and where it might have donors, but also the level of regulation in a given state as compared to the potential for gifts.

Gift planners have become adept at explaining the tax advantages of Qualified Charitable Distributions, even though there is no income tax charitable deduction involved. But are there advantages for other non-deductible charitable contributions?

Perhaps surprisingly, the answer is yes! Especially these days, with fewer taxpayers itemizing than ever, it is helpful to be prepared to discuss non-deductible contributions with prospective donors.

In this article, we will review three options for charitable gift planning without an income tax charitable deduction:

• Contributions of appreciated property from non-itemizers,
• Gifts of services, and
• Contributions of ordinary income property.

The Council for the Advancement and Support of Education (CASE) has released its “Global Reporting Standards, 1st Edition.” The vision for the Standards is audacious: “the first truly worldwide standards for advancement in education.” True to its title, among the book’s 350+ pages are supplemental chapters that provide specific guidance for counting charitable gifts in six different countries around the globe.

Although the primary focus is to articulate standards for the counting and recognition of all types of charitable contributions that will facilitate comparisons among educational institutions worldwide, the Standards also cover a broad range of issues beyond counting and recognition. There are extensive sections on ethics and standards of practice for advancement professionals, as well as guidance for navigating issues involving donor control and the moral thickets that can arise when a donor’s nefarious past comes to light.

Even if your organization is not involved in the education sector, it behooves you to be familiar with the CASE Standards. 

As of the writing of this article, the inauguration of Joseph R. Biden, Jr. as the 46th President of the United States is just days away. Although past changes in the balance of political power have had little impact on overall charitable giving, we know that when donors experience uncertainty they tend to postpone and delay their giving decisions. This is a natural reaction: charitable giving is optional and, faced with uncertainty, the rational choice is to slow down or defer giving until the future becomes clearer.

Changes in tax law can create new and different gift opportunities. Gift planners will need to watch carefully and be prepared to react strategically to changing circumstances. What concerns might surface among donors? Could potential changes affect donors’ gift plans? How might we anticipate and address them? In this article we begin with a review of some concerns that are likely to be on donors’ minds with respect to charitable giving followed by a discussion of some of the essential processes by which Washington works.

PG Calc speculates and offers commentary about impending changes to Federal tax policy and the possible impacts on charitable giving. However, written on the eve of America’s transition to the Biden/Harris administration and the beginning of the 117^th Congress, there’s a good chance that parts of it will pass into the category of "things we know for sure that just ain't so."

2020 Tax Tables