DAILY HEADLINE NEWS FEED | ARCHIVES OF PAST MONTHS

WAYS & MEANS APPROVES $193 BILLION ESTATE TAX REPEAL WITH ANTIAVOIDANCE PROVISIONS

With one Republican defector and one Democrat crossing party lines, House Ways and Means Committee Chair William M. Thomas, R- CA, on March 29 ushered through the taxwriting panel estate tax relief legislation designed to repeal estate, gift, and generation- skipping transfer taxes in a way that doesn't break the bank. Thomas also included in the bill provisions geared to combat tax avoidance attempts foreseen by the repeal of gift taxes. However, committee Democrats, most of whom favor reform over repeal, complained that those provisions in Thomas's bill might do little to curb tax avoidance and simply pay lip service to the issue. Pointing to recently circulated Joint Committee on Taxation estimates on full estate tax repeal, the Democrats say the income tax avoidance effects of full repeal are huge and are pushed off beyond the 10-year budget window of revenue scoring.
Sandra Kerr
National Committee on Planned Giving

EXECUTIVE SUMMARY OF PENDING ESTATE TAX RELIEF BILL

Some of the key provisions are:

• The estate, gift, and generation-skipping transfer (GST) taxes would be slowly phased out and completely repealed as of 2011.
• The unified credit would be replaced with a "unified exemption" in 2002 that follows the dollar amounts of the current law's unified credit effective exemption amounts. These are $700,000 in 2002 increasing to $1,000,000 in 2006 thru 2010.
• Also repealed in 2002 is the 5-percent surtax, which phases out the benefit of the graduated rates, and rates exceeding 53 percent.
• The estate, gift, and generation-skipping transfer tax rates would be reduced each year beginning in 2003 until they are repealed in 2011.
  Information compiled from Steve Leimberg's News of The Week Newsletter

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IRA CHARITABLE ROLLOVER INCENTIVE ACT

Rep. Phillip Crane(R-IL) has introduced H.R. 774, the "IRA Charitable Rollover Incentive Act." The bill parallels the provisions of the IRA Rollover Act introduced by Sen. Hutchison(R-TX) in the Senate. H.R. 774 also allows rollovers from IRAs directly into unitrusts, annuity trusts, pooled income funds, gift annuities and direct gifts to qualified charities. Rollovers will be permitted for IRA owners or owners and spouses, if the IRA owner is over 59 1/2.

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NEIGHBOR TO NEIGHBOR H.R. 824 :

Representative Jennifer Dunn (R) from Washington introduced H.R. 824 (the "Neighbor to Neighbor Act")in the beginning of March.

This pending Act would amend the Tax Code to provide new tax incentives designed to promote charitable giving. These incentives include:

• A "direct" charitable contribution deduction for donors making charitable contributions who do not itemize on their federal returns;
• The special income tax, charitable deduction reduction rules for charitable gifts of long term capital gain property would be repealed. Such gifts would be subjected to 50% of the contribution base limitation (for gifts to most public charities) or 30% (gifts to private nonoperating foundations);
• Owners of IRA accounts age 59-1/2 or greater will be allowed to make distributions from their IRAs directly to either: public charities (directly or in exchange for a charitable gift annuity), qualified charitable remainder trusts in which only the IRA account owner and/or such owner's spouse are the income recipients, and pooled income funds;
• Deductions could be taken for contributions made at any time up to the date of filing that tax year's federal tax return (excluding extensions); and
• The length of time allowed for carrying over charitable deductions that cannot be fully-deducted in a given tax year due to the applicable percentage limitation by either individual or corporate donors would be increased from 5 years to 10 years.

All of the amendments would take effect for taxable years beginning after December 31, 2000.
Information taken from a Planned Giving Design Center Summary

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PENDING BILL TO INCREASE MEDICAL RESEARCH DEDUCTION LIMITS

Senator's Torricelli (D-NJ) and Frist (R-TN) havejoined Representative's Dunn (R-WA) and Cardin (D-MD) to introduce the Paul Coverdell Medical Research Investment Act. Currently, medical research charitable deductions are limited to 50% (the current limit for overall gifts). This act proposes to increase the limit on charitable deductions for medical research to 80%, adding roughly 30% to the potential for gifts to mediacal research. The potential increase in gifts to medical research would be over $1 billion per year.

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The preceding is meant as general information and does not represent legal or tax advice. Individual circumstances vary - please consult your legal and tax advisors about your specific situation.
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