Special opportunity for favored tax benefits for cash gifts made to public charities before December 31, 2005

KATRINA EMERGENCY TAX RELIEF ACT OF 2005 (KETRA)
 

            Following the devastation of Hurricane Katrina, Congress wanted to help charities providing hurricane relief, as well as encourage charitable giving to other public charities.  In a statement issued on September 20, 2005, Sen. Charles Grassley of the Senate Finance Committee said, “Our goal is to encourage charitable giving outside of (Hurricane) Katrina relief to prevent the rest of the nation’s charities from seeing a downturn in giving as they did after September 11.” President George W. Bush signed the federal KETRA law on September 23, 2005, creating favorable tax provisions not only for victims of the disaster but also for individuals who make qualified charitable contributions to most types of public charities (not just hurricane-relief related charities) through December 31, 2005 Arkansas State University qualifies as a “public charity” for this favored tax treatment on charitable gifts.
 
What is the immediate impact of KETRA?  Under the provisions of KETRA, taxpayers who itemize deductions will be able to deduct up to 100% of their adjusted gross income (AGI) for qualifying gifts made between August 28, 2005 and December 31, 2005. Generally, for individuals, deductions for cash contributions to tax-exempt charitable organizations are limited to 50 percent of the taxpayer’s adjusted gross income (AGI) for the tax year. Under KETRA, the deduction limit is temporarily lifted, allowing individuals to make greater charitable gifts under the following circumstances:
 

            •           Contributions must be CASH or cash equivalents such as checks and credit cards (NOTE: appreciated assets do not qualify for this special treatment  – see KETRA § 301)

            •           Contributions must be made to the permitted types of PUBLIC CHARITIES such as churches, schools, hospitals, and other “public” charities (NOTE: supporting organizations, donor-advised funds, and private “nonoperating” foundations do not qualify – see KETRA § 301)

            •           Contributions qualify if made between August 28, 2005 and December 31, 2005.

How does this affect donors who make gifts to Arkansas State University?  For the qualifying period of August 28, 2005 through December 31, 2005, individuals who make cash gifts to Arkansas State University may deduct those gifts up to 100 percent of their adjusted gross income (AGI) rather than the usual 50 percent of AGI limit.  KETRA may allow some individuals to reduce their overall taxes significantly, perhaps even to zero, depending on the individual circumstance.
 
How can I take advantage of this opportunity under KETRA? Many donors may wish to increase their cash gifts to public charities before the December 31, 2005 deadline.  To make a gift online click here 
 
To make a gift to Arkansas State University Please mail your check to Arkansas State University, University Development, P. O. Box 1990, State University, AR 72467-1990. To make a gift online click here
 
            While only gifts of cash qualify for the special provisions of KETRA, other assets continue to qualify for charitable deductions under other provisions of the tax laws.  To make a gift using stocks, real estate or other appreciated assets, or to include Arkansas State University in your will or charitable trust, please contact Deborah Turner, director of Planned Giving, at
dturner@astate.edu or call (870) 972-3362 or toll free (866) 972-3362.  
 
For more information about KETRA from the IRS and the U.S. Congress Joint Committee on Taxation, go to http://www.house.gov/jct/x-69-05.pdf  or http://www.irs.gov  (Search: KETRA)  
 

Notice: The information contained in this document and any linked attachment is for educational purposes only and is not intended as legal, tax or financial advice and should not be considered to be a comprehensive explanation of all of the provisions of KETRA.  Please consult your personal professional advisors for all legal, tax and financial information.

 

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