Renaissance News
Volume 7-3
March 29, 2007

Teaching an Old Dog New Tricks
Charitable Remainder Trusts and Unrelated Business Taxable Income

December 20, 2006 marked a unique day in the taxation of charitable remainder trusts (CRTs). On that day, President Bush signed the Tax Relief and Health Care Act of 2006 (the "Act") into law. Buried in the Act is a short provision that significantly alters the tax treatment of unrelated business taxable income received by a CRT for tax years ending after December 31, 2006.

Click here to read an explanation of the new law and the opportunities it creates.

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RENAISSANCE CHARITABLE PLANNING WORKSHOP:
Returning to Indianapolis May 17-18

The Renaissance Charitable Planning Workshop will return to Indianapolis this summer on May 17 and 18. This two-day workshop will feature charitable planning experts speaking on such topics as:

  • Effectively using tools such as Donor-Advised Funds, Charitable Remainder Trusts, Charitable Lead Trusts, and Charitable Gift Annuities.

  • Appropriate Investment Vehicles

  • Identifying the Ideal Client

  • Dealing with common objections

At the conclusion of the seminar on day two, Renaissance will take you to the Indianapolis Motor Speedway to watch the Indy Cars practice for the Indy 500.

For more information, a sample agenda, and contact info, visit our website or send an e-mail to Vicki Reed.
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IRS Discount Rates for 2006-2007:

April: 5.6%
March: 5.8%
February: 5.6%

CASE STRATEGY:
Bates: Using a CRT to Sell Section 1250 Real Property
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Richard and Kathy Bates are ready to retire and plan to sell an apartment building they purchased for $2,000,000 which recently appraised for $6,000,000. After claiming $750,000 of depreciation, their adjusted basis is $1,250,000. Much to their surprise, their CPA explains that the portion of capital gain attributable to depreciation is subject to a higher capital gain tax at 25%. While meeting with their financial advisor they learn how they can preserve the full $6,000,000 value by selling the apartment through a charitable remainder trust. They are thrilled with the result that will provide them with an immediate income tax deduction, avoid the capital gain on the sale, provide a lifetime income stream, and leave a substantial legacy to charity.

Click here to learn more about this exciting new charitable solution example.

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RENAISSANCE:
Out and About

  • April 10-11 - Kevin McGrath will be speaking at an Estate Planning Workshop for Woodbury Financial Services in Minneapolis, MN

  • April 18 - Kevin McGrath will be in St. Petersburg, FL training at Franklin Templeton

  • April 26 - Greg Baker will be speaking at a PESI event in Merrillville, IN

  • April 27 - Greg Baker will be speaking at a PESI event in Indianapolis, IN

  • April 26-28 - Ted Batson will be attending the Advisors in Philanthropy Conference on Philanthropy in Chicago, IL

  • May 4 - Greg Baker and Kyle Christopherson will be attending the Indiana FPA meeting in Indianapolis, IN

  • May 8-9 - Greg Baker will be speaking to the Planned Giving Group of New England in Boston, MA

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CHARITY PROFILE:
Special Olympics Indiana

Approximately 170 million people, or 3% of the world’s population, have intellectual disabilities — the largest disability population in the world. Special Olympics Indiana is a not-for-profit organization that provides year-round sports training and competition in over 21 Olympic-type sports for children and adults with intellectual disabilities, reaching more than 12,000 athletes across Indiana. Through participation in sports, Special Olympics athletes become healthier, more confident and empowered citizens within their communities. Today, Special Olympics is a powerful vehicle for positive cultural change, fueling new opportunities and greater appreciation for the potential of all people, no matter their level of ability.

You can support Special Olympics Indiana locally this year by giving of your time or resources, or by enrolling someone with intellectual disabilities in our program. Come see what we’re about! Join us June 1 – 3 at Indiana State University in Terre Haute for the 2007 Special Olympics Indiana Summer Games, and witness the power of the Special Olympics movement. Learn more at www.soindiana.org or call us at (800) 742-0612.

TAX TIPS:
How Do I Complete Form 8283 For a CRT Deduction?

Form 8283 is required to be completed whenever a noncash charitable contribution exceeds $500. This form is necessary in order to substantiate the charitable deduction claim to the Internal Revenue Service. Unfortunately, the Form 8283 is not as user friendly with a charitable remainder trust or charitable lead trust contribution as it is for an outright gift to charity. The reason for this problem is the form does not account for the remainder or lead interest factor used to determine the charitable deduction. To learn how to make the necessary adjustments to account for a CRT or CLT deduction, click here.
"I have found that among its other benefits, giving liberates the soul of the giver" -Maya Angelou