Generation to Generation

Today President Trump signed into law the most extensive package of reforms to the United States income tax system since the overhaul of the tax code in 1986. The breadth and magnitude of the final version of the tax reform bill, generally referred to as the “Tax Cuts and Jobs Act” (“TCJA”), will impact almost all taxpayers (whether individuals, businesses, trusts or estates).

On this #GivingTuesday, if you are thinking about making a cash gift to one or more of your favorite causes and you intend to claim a charitable contribution deduction on your 2017 income tax return for the gift(s), here are three things you will want to do.

Around this time every year, the IRS looks at whether there has been a year-over-year increase in the Consumer Price Index and announces inflation adjustments to the federal gift and estate tax exclusion amounts for the following calendar year. In the midst of all the talk in Washington D.C. about tax reform and speculation about the fate of the estate tax, the IRS has just announced the gift and estate tax exclusion amounts for 2018. In general, these exclusion amounts tell a U.S. citizen or resident how much he or she can give away without incurring gift and/or estate tax on the transfer. Individuals and couples make use of these amounts, both during lifetime and at death, to transfer wealth to family and friends on a tax-free basis. When the amounts go up, as they are scheduled to do next year, it presents an opportunity to increase the tax-free giving.

Collaborations between charitable organizations and for-profit businesses to simultaneously promote a cause and raise funds for the charity have been demonstrably successful and are occurring with increasing frequency. When embarking on these initiatives, clearly your marketing and development (or advancement) professionals are key team members, but remember to put your legal department or legal advisor on your team to ensure that your good deeds are not punished.

It is not often that you can find inspiration within the Treasury regulations. But if you are a family foundation looking for innovative ways of pursuing your charitable mission, you will come away from reading the nineteen examples in the regulations finalized by the Treasury Department last year with a new enthusiasm for program-related investments, known simply as PRIs. The stories these examples tell of the myriad ways PRIs can achieve positive impact will be compelling to many foundations, especially those that have been reluctant to incorporate PRIs into their grantmaking and investment strategies.