Elizabeth Richardson wrote:
- quote -

I believe I was clear, sorry you misunderstood.
As client and I viewed the year end planning, I saw an RMD, and I saw a
$2000 donation, a check not yet written, but it's on her list of year
end "to do's". When I am done advising her, she in effect, has $2000
less taxable income, saving $300. The $2000 donation would not have
become a write-off, and still doesn't, but is counted as part of the
RMD. which she was forced to take anyway. At the end of the transaction,
she is ahead $300.
Had she had no charitable intent, she'd of course be out $1700, but my
first post stated that the donation was part of her original intention.

By the way, Elizabeth, when a client is told to donate appreciated stock
to get both the deduction and avoidance of short term gains tax, it's a
similar circumstance, in the end, they'd be ahead by avoiding being
charitable altogether. (Perhaps it was my choice of the word 'save'. If
I find a deduction or credit which the client otherwise would have
overlooked, I use the word 'save'. For the fact that this woman leaves a
meeting with me $300 to the better, I take pride in having 'saved' her
that $300. Zero sum game, no? Charity still has $2000, IRS is -$300,
client is +$300.)
JOE

"joetaxpayer" <joetaxpayer[at]nospam.com> wrote in message
news:BZSdnUZYpY4QbITYnZ2dnUVZ_uudnZ2d[at]comcast.com...

- quote -

Let's be clear about this. This client does not "save" $300. She spends
$1700. This might be what she intends, but don't sell this as saving. It
isn't. She doesn't have the $1700 she would have if she doesn't make the
donation.

Elizabeth Richardson

One under-advertised bit that slipped into the Pension Protection Act of
2006 is this; Any or all of an IRA RMD (required minimum distribution)
may be donated directly to a charity, and it will not count as income,
yet still count as a completed RMD.
Why is this good?
There are people who are in a 'standard deduction' scenario where they
do not take donations as itemized deductions. So for one person whose
money I manage, this will let her make her $2000 intended contribution
and avoid the tax on that portion of her RMD. A savings of $300. (In
fact, I will have her convert that much more to a Roth, to top off the
15% bracket. So in the end, she'll be able to convert the $2000 for
'free' as compared to this law not being in place).
This is done as a direct 'rollover' to the charity.

For some, the dollar amount/tax bracket may be higher, this can be quite
a break for your more generous, wealthier, clients.
This provision expires 12/31/2007.

JOE