Charitable IRA Rollover Made Permanent!
Congress has passed a tax extenders package that would make permanent the Charitable IRA Rollover provision, and President Obama is expected to sign it very soon.
The tax extenders package, known as the Protecting Americans from Tax Hikes (PATH) Act of 2015, makes permanent a number of provisions that have previously gone through a constant cycle where they expired at the end of a given year, only to have Congress extend them for a limited time. This cycle has made it difficult for donors to plan their giving effectively.
The key charitable provisions that are made permanent in the tax package allow:
- taxpayers over 70 1/2 to make donations directly from an IRA and will not be taxed on the amounts—up to $100,000 (The Charitable IRA Rollover);
- enhanced deductions for charitable contributions of real property for conservation purposes, and for donations of food inventory; and
- shareholders in an S corporation to reduce their basis in the S corporation's stock under Section 1366 only for their share of the basis of property contributed by the S corporation—not the fair market value.
This is a big moment for fundraising and the charitable sector,” said Jason Lee, general counsel for AFP. “We’ve been advocating for permanent extension of the IRA Rollover for years now, arguing that we’ll never see just how impactful the provision can be until donors and charities have the opportunity to include it in their giving plans. I think we’re going to see some big increases in IRA Rollover gifts over the coming years as donors are made aware of and understand the provision.”
Lee thanked members of Congress for including the provision in the extenders package and sent his appreciation to all of the members of AFP who have responded to the association’s policy alerts about the IRA Rollover over the years. “Every phone call, every email has helped get us to where we are today. The work of our members has been critical in educating Congress about the importance of the IRA Rollover.”
The tax package extends and makes permanent many other tax provisions unrelated to fundraising charity, and Forbes has drafted an overview of the overall legislation here.