A bipartisan group of ten Senators announced agreement to the “Infrastructure Investment and Jobs Act” late Sunday, August 1, 2021, and the Senate has agreed to proceed to consider the proposed legislation. The bill includes new federal investments for hard infrastructure, such as roads and bridges, broadband internet, transit, and electric utilities. A Senate vote on the bill could take place "in a matter of days," according to Senate Majority Leader Chuck Schumer. The Senate’s summer recess is scheduled to start August 9.
On May 28, the Biden Administration released a general explanation of its revenue proposals for Fiscal Year 2022. The so-called “Green Book” provides more detail on these proposals than had been available previously. Of especial interest to gift planners, under the heading “Treat transfers of appreciated property by gift or on death as realization events,” pages 62-64 discuss the Administration’s proposed changes to the taxation of capital gain when assets are transferred during life and at death. I reviewed some of these proposed changes regarding outright gifts and bequests of appreciated assets in a previous blog post, but until now there was no detail on how transfers to split-interest gifts would be treated.
The American Families Plan proposed by the Biden Administration includes a long list of initiatives aimed at expanding government support of children and families. It would cover much of the cost of these initiatives through a series of tax changes that include a major overhaul in the tax treatment of capital gains. It is far from certain that these tax changes will become law, but it is worthwhile to examine how they might affect the behavior of your donors if they did.
Less is often more. With a charitable gift annuity, a donor accepting a lower charitable deduction may mean more for the donor in tax savings. That might seem counterintuitive, but a combination of an historically low discount rate and an increased standard deduction can have tax implications for a donor considering a gift annuity for your charity. For gift officers, the message is to illustrate all the tax options and let the donor and their advisor decide which alternative best suits their objectives.
Why do donors care about the charitable deduction? The charitable deduction is valuable to many donors because it enables them to save taxes. The amount of taxes the donor can save with a given charitable deduction depends on several factors. Let’s consider a simple case first.