Sharpe Blog

Sharpe Blog

Posted January 7th, 2019

A Gift Planning Problem… and its Solution

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

Posted December 18th, 2018

Footnote to the Previous Blog

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

Posted December 6th, 2018

A Big Change Appears to be Coming

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

Posted November 27th, 2018

Inflation Adjustments for 2019

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

Posted November 19th, 2018

Let’s Look at Compound Interest—Part 3

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

Posted November 7th, 2018

Let’s Look at Compound Interest—Part 2

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

Posted November 1st, 2018

Let’s Look at Compound Interest

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

Posted October 19th, 2018

Time to Simplify Charitable IRA Beneficiary Distributions?

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

Posted September 26th, 2018

Charitable Remainder Trusts Have Three Life Stages

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

Posted September 14th, 2018

Gifts for Which There Are No Tax Benefits

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

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