Part 43

Thomas M. Boles, 33, G.C.
Director of Development
La Habra, California

The Taxpayer Relief Act of 1997 contains good news for those interested in charitable giving.

Happy New Year, and I pray it be a healthy, happy, and profitable year for you and yours!

A few months back, I wrote about the new Taxpayer Relief Act of 1997, and since that time I’ve been asked many questions, meaning I wasn’t very clear in my explanation. There-fore, I’ll try to make it a little easier to understand, as if anything from tax laws is easy!

The Taxpayer Relief Act of 1997 contains good news for those wishing to make gifts in support of their charitable interests. Naturally, that is of special interest to Masonry, particularly the Scottish Rite. Hopefully, charitable giving can be a benefit not only to the Masonic philanthropies you favor but also a real benefit to you and your family in your daily lives.

In addition to significant tax cuts for many, this legislation retains important tax incentives for making charitable gifts. 1) There is no change in the amount of charitable gifts you can deduct from your taxable income each year; 2) Deductions beyond maximum amounts you can use this year can still be carried forward to future tax years; 3) You can still deduct the full value of securities and certain other properties that have increased in value since you have owned them; 4) Capital gains tax that would otherwise be due on the sale of donated property can still be completely avoided; 5) There continues to be no limit under Federal law on the amount that can be left to charitable interests through your estate.

There are, however, a number of provisions in the new law that may affect the timing of your gifts and the property you use to fund them. You may also find the new law will result in your having more resources available from which to make your charitable gifts. I believe the changes in the Capital Gains tax rates were fairly well covered in my previous article, and, therefore, I’ll not repeat that information, nor will I cover the higher tax rates on certain properties.

Most of the questions I received were about the special treatment for home sales. Under previous law, beginning at age 55, taxpayers could exclude from capital gains tax up to $125,000 in gain on a sale of a principal residence. The new law allows up to $250,000 per person ($500,000 for a married couple) to be exempted from capital gains tax on the sale of a principal residence. Furthermore, instead of the previous once in a lifetime exclusion, this new benefit can be used as often as once every two years by people of any age.

Another important change to note is the fact that it is no longer possible to “roll over” gain on the sale of a home into the purchase of another home of equal or greater value free of capital gains tax. Any gain realized over the $250,000 (or $500,000 for a couple) will now generally be taxed on a sale or exchange of a home, regardless of how the proceeds of the sale are reinvested. Note: other real estate falls into a number of different categories under the new law.

I trust this will make it easier to understand this new “Relief Act.” It isn’t easy, and I advise you to visit with your personal tax attorney or tax accountant if you are involved in anything that might be related to this new tax act. Which leaves my “ad” for this month to read:

It isn’t your posterity, but your actions, that will perpetuate your memory.

Please Note: This information is distributed with the understanding that the author is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expertise is required, the services of a competent professional should be sought. From: A Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers.

To receive more information on the benefits of giving appreciated assets to the Scottish Rite Foundation, S.J., USA, print this web page, fill out the requested information, and mail to the address below:

For an investment of securities and/or real estate, please run a calculation and send it to me based on an investment of $__________. Assume the cost basis of the asset (what was originally paid, less depreciation) is $__________.

My birth date is _________________; My spouse’s is _________________.

Name ____________________________ Date _______________________

Address _______________________________________________________

City _________________________ State ________ Zip _______________

Send to: Scottish Rite Foundation, c/o Thomas M. Boles, 1761 East Woodcrest Avenue, La Habra, CA 90631-3260

Brethren Benefit From Pooled Income Fund
What is one of the better ways you can benefit yourself and your family and, at the same time, support the Scottish Rite and its Childhood Language Disorders Program? The answer is simple: The Scottish Rite Pooled Income Fund!

The Scottish Rite Pooled Income Fund allows you and, if you wish, your wife and/or other beneficiary(ies) to receive a worry-free lifetime income as well as attractive tax benefits by joining the Fund via a financial gift to The Scottish Rite Foundation, S.J., USA. For more information call, 1-800-486-3331 or fax 202-387-1843.

Grand Commander Kleinknecht will personally respond to your inquiry. If he is not available, please leave your name and number, and the Grand Commander will return your call at his earliest opportunity. Through the Scottish Rite Pooled Income Fund, you can do well for yourself and your family while also doing good for others!