Impacts of financial decisions

CLA Talks Video: PATH Act Makes IRA Charitable Rollovers Permanent

  • 5/24/2016

The PATH Act of 2015, passed in the waning days of 2015, is good news for nonprofits. It means that a number of expired tax provisions that directly impact charities, foundations, associations, and other nonprofits were enhanced, made permanent, or both. Among them was the IRA charitable rollover provision, which was finally made permanent after expiring at the end of 2014.

More on the PATH Act

Individuals, businesses, and nonprofits can all find positive tax developments.

Speaking at the CLA National Foundation Conference in February 2016, Sue Clark, principal in private client tax, said a permanent IRA charitable rollover provision will allow nonprofits to begin marketing the giving strategy to donors rather than just reacting at the end of each year when an extender bill is passed.

Under the new law, taxpayers who must begin taking required minimum distributions from an IRA at age 70.5 may roll up to $100,000 of their IRA annually directly to a charity. When they do, the rollover amount is not included as income and is therefore not taxed. For many retirees, this is a superior tax result compared to taking a taxable IRA distribution and writing a check to a charity.

In a three-minute CLA Talks video clip, Clark talks about this and other PATH Act provisions that benefit nonprofits and/or their supporters:

  • An enhanced deduction allows land owners to reduce their taxable income by giving up development rights to their property for conservation purposes. The deduction is now 50 percent of adjusted gross income; it had previously been 30 percent.
  • Special rules for contributions of food inventory by a business are enhanced and made permanent. This allows taxpayers to receive a deduction that is generally equal to the basis of the property contributed plus half of the appreciation.
  • There are now permanent rules related to basis calculation when S corporations give away property.
  • A new provision related to the valuing of a charitable remainder trust when terminated.

View additional installments in the CLA Talks video series.