Planned Giving

Your act of generosity, our longevity

With planned giving, you can provide long-lasting support for Boys & Girls Clubs of South Puget Sound while enjoying financial benefits for yourself.

Text Resize
Subsribe to RSS Feed

Tuesday February 19, 2019

Washington News

Washington Hotline

Bipartisan Budget Bill

With a Senate vote of 71 to 28 and a House vote of 240 to 186, a two-year budget bill for the federal government passed on Friday, February 9. The bill expands federal spending by over $300 billion during 2018 and 2019.

The compromise increases federal spending caps by $143 billion this year and $153 billion in 2019.

The Department of Defense budget is increased by $80 billion this year and $85 billion in 2019. Domestic spending expands by $63 billion this year and $68 billion in 2019.

The domestic spending increases this year are targeted in specific areas. $10 billion will be spent on roads, bridges, waterways and other infrastructure. This bill designates $3 billion to be used to reduce the number of lives lost due to the opioid epidemic.

Congress allocated $2 billion to help rebuild Veterans Administration hospitals. Another $2 billion is allocated to training programs for police officers, teachers and firefighters.

Following the devastation of Hurricanes Harvey, Irma and Maria, approximately $90 billion will be allocated toward disaster relief in Texas, Florida and Puerto Rico.

The bill also restores many energy tax credits. There is a five year tax credit renewal for fuel cells, small wind energy projects and geothermal hot pumps. Tax credits for 2017 were restored for electric vehicles, biofuel and home energy-efficiency improvements.

The debt limit is suspended until March 2019. This places the next debt limit vote after the November elections.

Research Foundation Not Tax Exempt

In David Muresan Scientific Research Foundation v. Commissioner; No. 11943-14X; T.C. Memo. 2018-13 (4 Feb 2018), the Tax Court denied tax exempt status to a medical research foundation.

Inventor David Muresan had acquired two patents in Romania and four in the United States. His U.S. patents covered electronics, lighting, computer hardware and digital pictures. In 2011, he founded a Washington nonprofit named the David Muresan Scientific Research Foundation (DMSRF).

On August 24, 2011, he filed IRS Form 1023, Application for Recognition of Exemption.

Muresan was the sole director and officer of DMSRF. After four IRS requests for additional information, the IRS denied the application for exemption, finding that DMSRF was not exclusively operated for charitable or educational purposes.

The Service noted that DMSRF failed the operational test, more than an insubstantial part of its activities were noncharitable and DMSRF earnings could accrue to a private party. For all of these reasons, the exemption was denied.

Muresan claimed that DMSRF did not function for his private benefit and should therefore be exempt. The Tax Court noted under Reg. 1.501(c)(3)-1(d)(5)(i) a scientific research organization may not conduct research only for a founder and it may not permit transfer of patents to a founder.

Because Muresan was the only director and officer, and profitable patents could be transferred to him, the Tax Court denied Sec. 501(c)(3) exempt status.

Pension Plan Limits Unchanged

In IR-2018-19, the IRS stated the Tax Cuts and Jobs Act change from the traditional consumer price index (CPI) to a chained CPI will not affect 2018 qualified plan limits.

In October 2017, the IRS published Notice 2017-64, 2017-45 IRB 486 with inflation adjustments for IRAs, 401(k)s, 403(b)s and multiple other retirement plans. With the change in the indexing method for qualified retirement plan limits from the traditional CPI to the chained CPI, many professionals were concerned that the 2018 numbers would change.

Because most pension software companies had programmed the October 2017 retirement plan limits in their software and thousands of professionals had shared these numbers with clients, it would have caused major disruption if the IRS changed retirement plan limits.

With the chained CPI, the future inflation rate is expected to grow more slowly. As a result, there will be smaller increases in future contribution limits for IRAs, 401(k)s, 403(b)s and other retirement plans. The October 2018 IRS Notice is expected to update all retirement limits with the chained CPI method.

Applicable Federal Rate of 2.8 for February -- Rev. Rul. 2018-5; 2018-6 IRB 1 (17 Jan 2018)

The IRS has announced the Applicable Federal Rate (AFR) for February of 2018. The AFR under Section 7520 for the month of February is 2.8%. The rates for January of 2.6% or December of 2.6% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2018, pooled income funds in existence less than three tax years must use a 1.4% deemed rate of return. Federal rates are available by clicking here.

Published February 9, 2018
Subsribe to RSS Feed

Previous Articles


Gift Options

Donor Stories

Learn how others have made an impact through their acts of giving to our organization and others. Explore the many benefits of charitable gift planning.


How to Give

Learn how to make a gift that provides tax benefits and even life income.


What to Give

Find out what type of assets make the best planned gifts. Learn about gifts of cash, securities and property.


Planned Gifts Calculator

View a presentation that shows the benefits of a planned gift based on your property and goals.



Personal Planner

Bequests to Your Favorite Charity Bequests to charity are the most popular type of planned gift. A donor may retain assets during life and then leave a...


Finance News

Hewlett-Packard Continues Resurgence Treasuries Rise on Mixed Economic Data Interest Rates Stay Low

Savvy Living

Personal Tech Products Designed Specifically for Seniors. Can you recommend any tablets, smartphones or computers that are specifically designed for seniors? I would like to buy...


Washington News

IRS End-of-Year Tax Tips

In IR-2014-110, the IRS offered tax tips for end-of-year charitable giving. 1. Household or Clothing Gifts ? These items must be in good used condition or better..


For Advisor

Advisor Resources

We have a complete tax update service for CPAs, attorneys, CLUs, CFPs, ChFCs, trust officers and other professional friends.


Deduction Calculator

The GiftLaw Calculator is a planned gifts calculator for professionals that follows the IRS format


Private Letter Ruling

Estate Distributes to Foundation without Self-Dealing

Decedent formed Company and subsequently formed Irrevocable Trust...


Washington News

IRS End-of-Year Tax Tips

In IR-2014-110, the IRS offered tax tips for end-of-year charitable giving. 1. Household or Clothing Gifts ? These items must be in good used condition or better.


GiftLaw Pro

Charitable Tax Reference

GiftLaw Pro is a complete charitable giving and tax information service inside the GiftLaw website...


Case of the Week

Living on the Edge, Part 4

Rhea Jones, 75, lives in a beautiful coastal town in northern California. Rhea?s home occupies three...


Article of the Month

Gifts of Pass-Through Business Interests

A charitable gift of a business interest can make a wonderful gift to charity. At the same time,...