Charity Advisor Resource
Volume 1.3 -
The Law Office of Jonathan Ackerman, LLC and Charitable Registry, LLC sponsor the Charity Advisor Resource (CAR) Newsletter. The CAR Newsletter is a tool to educate all persons with an interest in charitable organizations and charitable gift planning. The CAR Newsletter will (i) build a fundamentals track of educational information for those persons new to charities and charitable gift planning, (ii) provide an advanced track for those persons who deal with the technical issues, (iii) present case studies to provide a practical understanding of the tools and traps in closing an irrevocable charitable gift or creating a complex charitable entity, and (iv) discuss topics of current interest.
In This Issue
Featured Article - Gold as a Hot Topic Today
Technical - Charitable Contribution Deduction - Part 1 - Income Tax Issues (& Gold)
Fundamentals - How Does a Donor Own Gold?
Solicitations Corner & Some Happenings
Featured Article - Gold as a Hot Topic Today
Gold as a Charitable Gift Option 

Here's some interesting facts about gold as an investment based upon an article in the Wall Street Journal:

  • In 2008, U.S. stocks lost 37% while bullion gained 5.5%.
  • Since 2002, gold prices have tripled while Dow Jones Industrial Average has dropped 10%.
  • Over the past 4 decades, gold has been 1/3 more volatile than the S & P's 500 stock index, but delivered a lower return - annualized 8.4% vs. 9.1% for the S & P index.
  • After reaching a record high of $850 per ounce in January 1980, gold's price fell almost 44% in 2 months and didn't reach $850 again until January, 2008 - meaning it was flat, while inflation rose 125%.
The current run-up of value in gold and gold-related assets, in combination with its dramatic history of volatility, makes TODAY the right time to consider a gift of gold. The donor is in a position to possibly get a fair market value deduction at a significantly appreciated value for those assets, and may correspondingly avoid the inherent taxable gain on the gifted asset. [more...]
Charitable Contribution Deduction - Part 1 - Income Tax Issues (& Gold)
Some of the income tax issues associated with a gift of gold are as follows:

Generally - Section 170(a) ("Section" shall refer to the Internal Revenue Code of 1986, as amended, unless otherwise indicated) provides for income tax charitable deductions for certain types of contributions to qualifying charitable entities. Section 170(c) defines charitable contributions. Under this Section, the general rule is that the contribution must be "to or for the use of" an entity "organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes." Different income tax rules apply depending upon the character of the charitable organization, i.e., a public charity or a private foundation. [more...]
How Does a Donor Own Gold?
There a variety of means by which a donor may hold gold - some obvious, and some less so.
In any event, this discussion should at least put you on notice that gold can be held in a number of ways, each with its own layer of potential complications. A complete analysis with an expert in this regard is of the utmost importance to fully understand the nature of the assets being contributed to the charity, the ways to determine their value and the proper method to handle the consummation of the gift.
Here's a few of them and the basics:
Jewelry - this is self-explanatory.
Numismatic Coins - are collectible coins whose value surpasses that of their actual metallic content.
Bullion Coins - are recently minted coins - such as the American Gold Eagle, South African Krugerrand or Canadian Maple Leaf - whose value reflects their actual weight and content. [more...]
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Jonathan Ackerman, Esquire
Law Office of Jonathan Ackerman, LLC 
Terri Ackerman, President
Charitable Registry, LLC
Copyright 2009 Law Office of Jonathan Ackerman, LLC
Disclaimer - The material in this CAR Newsletter is provided for informational purposes only and does not constitute legal or tax advice on any matter. Law Office of Jonathan Ackerman, LLC assumes no responsibility for the accuracy or timeliness of any information provided herein. This information is not a substitute for obtaining legal or tax advice from the reader's own counsel, given their own particular set of circumstances. Charitable Registry, LLC is not a law firm and does not render legal advice of any kind.
Note - Nothing in this publication is intended or written to be used and cannot be used by any person for the purpose of (i) avoiding tax penalties, or (ii) promoting, marketing or recommending to another party any transaction or matters addressed herein.


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Jonathan Ackerman

Solicitations Corner & Some Happenings

BEWARE - Misleading request for form filings - The California Secretary of State's office has been advised that solicitation letters are being sent to California businesses encouraging them to comply with its Corporations Code filing obligations by submitting fees and documents to a third party rather than by filing directly with the Secretary of State's office. Charities have also been contacted in this regard. [more...]
Tax Court challenges income tax deduction on basis of gift to private foundation - charitable income tax deductions have historically been limited where the IRS can prove that the donor retains strings over a gift to charity, for instance, where the donor retains possession of the gifted asset after the contribution to charity. But, in this case, the IRS argued that the donor retained too much control over a gift to his own private foundation, solely because he controlled the private foundation. [more...]
Margin Debt as UBI - in a recent case, the U.S. Court of Federal Claims held that securities acquired by a charity on "margin" were debt-financed property, and the income derived on the sale of such securities was debt-financed income subject to unrelated business income (UBI). The charitable trust in this case was created to support solely Cornell University. [more...]
Proposed Regulations Issued for Type III Supporting Organizations - Under the Pension Protection Act of 2006, Congress significantly changed the permissible structures and activities of supporting organizations as defined under Code Section 509(a)(3). Though this is a very technical area, for purposes of this Happenings update, let's just highlight a few big changes from the Notice of Proposed Rulemaking, which preceded the issuance of these Proposed Regulations. [more...]
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