As reported earlier this month in Advisor’s Journal [Qualified Charitable Distributions from an IRA (CC 11-03))], a qualified charitable distribution (QCD) of up to $100,000 made from an IRA will not be included in the taxpayer’s gross income, as long as the contribution is made directly from the trustee to a public charity or conduit private foundation when the account owner is at least 70½ years old.

One benefit of taking a QCD is that it can qualify as a required minimum distribution (RMD). For the taxpayer who does not have a financial need for the distribution, making a QCD is an opportunity to take the RMD—avoiding the severe tax penalties for not taking the distribution—while excluding the distribution from taxable income.

But because the QCD provision lapsed during 2010, taxpayers who took an RMD during 2010 are out-of-luck.  

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

There is a battle brewing over who should value donated insurance policies: insurance companies or qualified appraisers.  In last week’s Advisor’s journal article, Proposals for Simplification of Life Insurance Policy Donation, we discussed a proposal to allow insurance company valuations to satisfy the qualified appraisal requirement for the deductibility of a donated life insurance policy. But some commentators believe that the current system—which requires an appraisal by a qualified appraiser—protects donors and charities and helps avoid “questionable valuations.”

When donated property has a value greater than $5,000, a qualified appraisal is required for the taxpayer to take a charitable deduction for the contribution (Section 170 of the Internal Revenue Code).  Appraisal of the value of a donated policy must be conducted by a qualified appraiser.  In contrast to the charitable donation context, use of a carrier valuation statement is standard for gift tax valuation purposes—no appraisal is needed.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For in-depth analysis of the topic of charitable giving, see Advisor’s Main Library Section 1 F—Estate Planning Through Charitable Contributions.

We invite your questions and comments by posting them in our blog AdvisorFYI, or by calling the Panel of Experts.