More On Tax Planningfrom The Advisor's Professional Library
- Charitable Giving Charitable giving can reduce your clients’ tax liabilities. However, the general and verification rules for the deduction of charitable gifts must be understood in order to take full tax advantage of such gifts.
- ETF Taxation The use of ETFs may be attractive to certain investors. The tax advantages may make them even more attractive.
The U.S. House of Representatives last week passed a tax bill — with bipartisan support, no less — intended to encourage charitable giving.
The America Gives More Act (H.R. 4719) passed 277–130, with support from 221 Republicans and 56 Democrats.
The act comprises five provisions. It would make permanent three expired tax extenders:
- The IRA charitable rollover, which allows individuals at least 70-1/2 years old to make tax-free charitable donations up to $100,000 from Individual Retirement Accounts
- The enhanced deduction for donating land conservation easements, which allows land owners to reduce their taxable income by giving up development rights to their property for purposes of preserving natural resources
- The enhanced deduction for donating food inventory, which allows individuals and organizations to reduce their taxable income by providing qualifying food inventory to certain charitable organizations
In addition, the legislation would allow private foundations to reduce the excise tax on net investment income from the current 2% to 1% in any year in which they exceed their average historical level of charitable donation.
It would also extend through April 15 individual taxpayers’ deadline for claiming charitable donations on the previous year’s tax filing.
The Obama administration in advance of the vote threatened to veto the package of tax breaks because it failed to offset the estimated $16 billion in lost tax revenues.
The White House in a statement accused Republicans of “imposing a double standard by adding to the deficit to continue and create tax breaks that primarily benefit higher-income individuals, while insisting on offsetting the proposed extension of emergency unemployment benefits.”
For their part, foundations gave the House a hearty pat on the back.
The three extenders included in the House legislation are among more than 50 that have expired or will do so at year-end. In April, the Senate voted to extend all of them for two years.
With midterm elections four months away, it is highly uncertain whether the House and Senate will take up this legislation or any tax-related matter in this session of Congress.