American Society for Technion-Israel Institute of Technology: Legislative Update

Legislative Update
Wednesday, April 30, 2008

The Tax Technical Corrections Act of 2007, signed into law by President Bush on December 29, 2007 contains at least two items of interest to charitable gift planners:

The Act corrected a potential estate and gift tax anomaly for gifts of partial interests in art works to several charities created by the Pension Protection Act of 2006. Donors of fractional interests in the same work to multiple charities will be able to deduct the entire value of the work.
Effective January 1, 2008, whenever a charity disposes of gifted tangible personal property, an officer of the charity must certify that the charity's use of the property was not only related to its exempt purpose, but that such relation is substantial. Failure by the charity to comply results in the donor having to limit his/her deduction to the cost of the property.

Here's a link to the Joint Committee on Taxation's explanation of the new law: http://www.house.gov/jct/tx-119-07.pdf or http://support.ats.org/site/R?i=u6XNArcEr1fZtJ46uHqp9g.

Subjects of Future Legislation?

Two recent news stories are likely to draw a regulatory response.

The Los Angeles Times reported that half of all art donations audited over the past 20 years by the IRS were appraised at almost double their actual value. Sen. Charles Grassley (R-Iowa), the ranking Republican on the Senate Finance Committee, has asked the IRS to study this issue further and is considering new legislation to curtail this abuse.

Here is a link to the article: http://www.latimes.com/news/local/la-me-irs2mar02,0,3015698.story.

Also widely reported was a study by a New York University finance professor that posits that corporate CEOs may be taking advantage of inside information to maximize charitable deductions for company stock transferred to their own private foundations. According to the study, such gifts are often followed by sharp declines in the price of the donated stock. He even suggests CEOs may be backdating their gifts in a way similar to recent stock option backdating practices in collusion with the charitable donee and others in order to increase their personal deductions.

Here's a link to an article about the study that originally appeared in the New York Times: http://www.iht.com/articles/2008/03/05/business/donate.php.

Gift of the Month-Retirement Assets

While proposals to extend or expand the Charitable IRA Rollover provisions of the Pension Protection Act of 2006 continue to languish in Congress, other gifts of retirement assets remain an effective means of supporting the ATS while providing personal benefits to our donors and their families. Do you know that simply naming the ATS as beneficiary of your IRA, 401(k) or 403(b) account will allow you to make a gift of those retirement assets to the ATS at a tax cost of as low as 30 cents on the dollar? Did you know that you could save up to 40 percent on taxes associated with owning retirement assets and provide your heirs with a substantial income for a period of years?

Please contact me atmark@ats.org or at (212) 407-6313 if you'd like more detailed information or a confidential personal gift proposal.

As always, we would love to hear from you. What topics would you like us to cover in future updates? What interesting item would you like us to share with other list members? Please feel free to contact me at mark@ats.org or at (212) 407-6313.

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