Click to return to SIOL ARCHIVES page

                                 
                                                   
STRATEGIC ISSUES...ONLINE    
For week of October 31, 2005, Issue #235
 
1.  Gift Deduction Ceiling Suspended
2.  Focus on Fraud: 
3.  Tech Tip Weekly: 
4.  Compliance Calendar
 
1.  Gift Deduction Ceiling Suspended
 
The Katrina Emergency Tax Relief Act of 2005 (KETRA), provides that cash contributions made from August 28 through December 31, 2005, will be fully deductible, up to 100% of a donor's adjusted gross income, if the donor so elects.  The pre-KETRA "ceiling" on charitable deductions was 50% of a taxpayer's AGI, with a five-year carryover for excess deductions.  Congress did not expand the 30%-of-AGI ceiling for gifts of capital gain property.
 
The higher ceiling for cash gifts is not limited to donations for hurricane relief.  However, donees must be publicly supported charities, not private foundations, Code 509(a)(3) supporting organizations or donor advised funds.  KETRA also exempted qualifying cash contributions from Code 68 rules that may reduce itemized deductions of taxpayers with high incomes (AGI of more than $145,950).
 
Corporations are generally limited to charitable deductions up to 10% of taxable income.  Cash gifts earmarked specifically for Hurricane Katrina relief and made before January 1, 2006, are not subject to limitation.
 
Planning Considerations.  The Katrina legislation may present an opportunity for donors over age 59 1/2 to access IRA funds to make charitable contributions through the end of 2005.  Amounts withdrawn will be included in the donor's AGI, but could then be deducted as cash contributions, up to 100% of the donor's AGI.  (Individuals under age 59 1/2 would owe a 10% penalty on "premature distributions.")
 
The legislation also should be helpful to donors with large carryover contribution deductions from past years who wish to make and deduct further contributions in 2005, and to those who might consider cashing out other investments, such as U.S. savings bonds or stock options, and offset the income realized with charitable contributions.
 
Caution is advised, however.  A withdrawal from on IRA, though paired with an offsetting charitable deduction, may nonetheless produce an increase in the donor's taxes.  Enlarging AGI may generate additional Michigan income tax.  In addition, a boost in the donor's AGI may erode personal exemptions and itemized deductions that have "floors" based on a percentage of AGI, as well as trigger reduction of certain itemized deductions under Code 68, mentioned earlier.  (Qualifying charitable deductions are exempted.)
 
Please call us before you act if you would like to take advantage of these charitable contribution rules.
 
2.  Focus on Fraud:  Corporate and Identity Theft - Part 3
 
"Identity theft" needs to be differentiated from "Identity crimes" as being committed offenses using the stolen personal or business identifying information, i.e. identity theft comes before identity crime.
 
Personal identity theft (PIT)...the unauthorized obtaining of another person's personally identifying information (PII)
 
PII    Name
        Mailing address
        Telephone number(s)
        Driver's license number
        Social Security number
        Place of employment
        Checking or savings account numbers   
        Credit card number(s)
        Mother's maiden name
 
        With mother's maiden name, Social Security number and birth certificate, a complete PIT identity takeover is possible.
 
Business identity theft...the unauthorized obtaining of a business's business identifying information (BII)
 
BII    Name
        Address, mailing and physical location(s)
        Telephone number(s)
        Corporate credit card number(s)
        Banking account number(s)
        FEIN  Federal Employer Identification Number
        TIN  Treasury Identification Number
        EFIN  Electronic Filing Identification Number
        ETIN  Electronic Transmitter Identification Number
 
Part 4 next week.
 
3.  Tech Tip Weekly:  Changing Your Computer's Settings
 
The Settings tab of the Control Panel allows you to change the color quality of your monitor between Medium (16 bit) and Highest (32 bit) used by MS Windows XP, and select a new screen resolution (the higher the number of pixels, the smaller the items and fonts appear on the desktop, enabling Windows to display more stuff on-screen).  You can also click the Advanced button to open a dialog box for your monitor in which you can tweak your computer monitor and screen adapter card settings, Click the Troubleshoot button to open a diagnostics screen in the Help and Support Services window that can suggest things to try if you're experiencing screen display problems.
 
To reach the Control Panel, click Start, Settings, Control Panel, Display.  The settings tab is the last of five tabs, following Themes, Desktop, Screensaver, and Appearance.
 
4.  Compliance Calendar
 
November 2
-Employers deposit Social Security, Medicare and withheld income tax for payments October 26, 27, and 28.
 
Thank you for subscribing to the weekly edition of Strategic Issues...Online.  If you wish to unsubscribe to this newsletter, please Reply to this e-mail and type "unsubscribe" in the subject line and your name will be removed.  If you know of someone else who would benefit from this newsletter, please feel free to forward this on to them or send us their e-mail address and we will be happy to add them to our mailing list. This newsletter has been compiled by Prangley Marks, LLP for our clients and other interested persons.  The information presented may or may not apply to your facts and circumstances and should not be acted upon without professional advice.  
 ***Privacy Policy***
Prangley Marks, LLP will not sell, distribute, or otherwise misuse any email addresses received or collected for the purpose of this newsletter.
 
In order to comply with requirements imposed by the IRS which may apply to the Strategic Issues...Online as distributed or as re-circulated by our members, please be advised of the following:
THE ABOVE ADVICE WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, BY YOU FOR THE PURPOSES OF AVOIDING ANY PENALTY THAT MAY BE IMPOSED BY THE INTERNAL REVENUE SERVICE.
Prangley Marks, LLP
Accountants & Consultants
"The Way We Figure, We Are The Only CPA Firm You Will Ever Need"
 11th Floor Bridgewater Place, 333 Bridge Street, NW,Grand Rapids, MI  49504-5356
Phone#:  616-774-9004, Fax#:  616-774-9081