Tax Newsletter

• The Unrelated Business Income Tax (UBIT)
  Nonprofit organizations, e.g., charities, were historically not taxed. In 1950, however, an amendment to the Internal Revenue Code made taxable income earned from activities that did not further the tax-exempt purposes of such... Read more.
• Tax Issues Related to Qualified Domestic Relations Orders and Divorce
  An increasingly large portion of the assets of married couples consist of rights to payments and stock from pension plans. In many states such assets are subject to division during a divorce. Divorce and division of property are... Read more.
• Estate Tax Valuation Methods for Securities
  In 2001, Congress passed legislation incrementally increasing the amount exempt from federal estate taxes and completely eliminating estate taxes in the year 2010. However, the legislation contains a “sunset” provision... Read more.
• Choice of Entity: Delaware Series LLC
  Limited Liability Companies (“LLCs”) are a form of business ownership which is a separate legal entity much like a corporation. An LLC is treated like a partnership for tax purposes and like a corporation for liability... Read more.

• It’s Not Just Uber, California Bill Could Transform Tricky Tax And Legal Rules On Independent Contractors
• Taxpayers’ Right to Fight Tax Rules May End Up at Supreme Court
• Proposed US Tax Rules for Cloud Computing Transactions and Digital Downloads – International Implications Are a Reason to Review
• Proposition 13 treats all California property taxes the same. Voters could change that in 2020
• Judge sides with Manheim Township tax collector in 21-month legal battle with school district

Deduction Limits on Contributions to Charities

If you made a tax-deductible contribution to a qualified charitable organization, the actual amount you can deduct may be limited to a percentage of your adjusted gross income. The amount that you are entitled to deduct depends on several factors:

• Who you made a contribution to
• What you contributed
• Your income

The 50% Limit

In general, your charitable deduction cannot be more than half of your adjusted gross income. Contributions made to qualified organizations are subject to the 50% limit. These types of organizations include:

• Indian tribal governments
• The United States, District of Columbia, or any state or political subdivision of the U.S.
• Churches
• Educational organizations with a full student body and faculty on site
• Hospitals and research centers

Different rules may apply to contributions of capital gains property (property that would bring long-term income).

The 30% Limit

Your charitable deduction cannot be more than 30% of your adjusted gross income. Contributions subject to the 30% limit include:

• Contributions of capital gains property to any 50% limit organizations (generally)
• Money spent on behalf of a student living with you who was selected by a qualified organization
• Gifts to other qualified organizations besides those subject to the 50% limit
• Gifts other than those that are capital gain property for the use of any organization

The 20% Limit

For some contributions, your deductions cannot be more than 20% of your adjusted gross income. Contributions subject to the 20% limit are all those that are capital gains property gifts to or for the use of a charitable organization, aside from those that fall under the 50% limit.

Note: If you contribute 20% or less of your adjusted gross income, there are no limits to the deduction for your total contributions.

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