Dora, aged 80, wants to provide her disabled niece, Fredda, with a fixed life income, maybe an income that will increase by a certain amount if Fredda lives to a certain age. Fredda is aged 50 and has a shortened projected lifespan because of her disability. Nonetheless, Fredda’s doctor says Fredda could live to age… read more

Last time we looked at the IRS’s new regs on qualified appraisals. This time we look at an exception to the qualified appraisal rules that existed under the old regs that is erased from the new regs. It’s the reasonable cause exception. The reasonable cause exception allowed a flawed appraisal, even a badly flawed appraisal,… read more

There appears to be a significant change coming in how appraisals must be done for certain charitable gifts. Here’s an example: Donor 1 sets up a charitable remainder unitrust that is to make payments to Donor 1 for life. Donor 1 funds the unitrust with undeveloped land. Donor 2 does the same thing, only she… read more

Inflation adjustments for 2019, released recently by the IRS, are slightly lower than they might otherwise have been, due to a new calculation method.  Increases are now determined using the chained consumer price index (C-CPI), which recognizes that when certain prices rise, consumers find cheaper alternatives.  Among this year’s adjustments: Income tax brackets Capital gains… read more

Last time, we left off with a homework problem. Now a homework problem, the solution to which will be given next time. Here’s the problem: Your VP for development asks you to determine the present value of a $1 million bequest to be received under the will of a living individual aged 79. Question: What… read more

Last time, we looked at two concepts: compound interest and present value. Turns out they’re two sides of the same coin. If you grasp the idea of compound interest, you also grasp the idea of present value, maybe without realizing you do. Compound interest tells us what $1 (or $1 million) will grow to after… read more

Compound interest theory is at the center of financial analysis. What is compound interest? It’s the interest earned on money invested over time. Invested at some fixed interest rate. Let’s assume $1 is invested at 6% interest (.06 mathematically) for exactly one year. At the end of the year, the $1 has grown to $1… read more

The process of receiving fund left through IRA designations is often time consuming, complex, expensive and, in some cases, in violation of the custodian’s fiduciary duties and federal tax law. For example, many IRA custodians or administrators have adopted a process that requires charities to establish an “inherited IRA” in order to receive their charitable… read more

The three stages are 1. the drafting of the trust instrument 2. the funding of the trust and 3. the administration of the trust The drafting stage: IRS has provided specimen agreements for annuity trusts and unitrusts, which makes the drafting of CRAT and CRUT documents relatively easy. But there are some cautions here. Some… read more

Gift planning has focused traditionally on squeezing maximum tax benefits out of a gift arrangement. There are, however, some good gift arrangements for which little or no tax benefits are available. “Good” here means good for the donee organization. Let’s consider some specific examples. Donor contributes a valuable painting she painted: Donor’s income tax charitable… read more