Government Relations

Legislative Bulletin

December 16, 2010

Senate Passes IRA Charitable Rollover Extension

On December 15, the Senate passed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 by a vote of 81-19. This new legislation extends the IRA Charitable Rollover provision that expired at the end of 2009. Specifically, the legislation reinstates the Rollover for 2010 and allow any eligible gifts made by January 31, 2011 to be treated as a 2010 donation. The legislation also sets the new expiration date for the Rollover as December 31, 2011, meaning that eligible gifts made throughout all of 2011 will qualify for favorable tax treatment.

The legislation, which is in the form of a Senate amendment to a H.R. 4853, a House-passed tax bill, also turns into law the previously announced compromise framework between President Obama and Congressional Republicans. It extends the 2001 and 2003 tax cuts for all income levels, revive and extend the expired estate tax at a rate of 35 percent and an exemption level of $5 million, and revive and extend through 2011 the expired alternative minimum tax “patch,” among many other significant provisions. It is estimated to cost approximately $858 billion over 10 years. To read a summary of the legislation, click here. To see the full text, click here.

While the legislation passed the Senate, its fate in the House remains uncertain as some Democratic lawmakers are unhappy with the tax cut and estate tax provisions. Please watch the Partnership for Philanthropic Planning website at www.pppnet.org for new developments.

Recognizing that this bill may be enacted too late for taxpayers to use their IRAs to make charitable gifts in 2010, the bill allows a taxpayer who makes a qualified rollover to charity in January 2011 to elect to have it treated as if made on December 31, 2010. It has been suggested that the legislation be amended to also provide that a taxpayer who makes a direct cash gift to a qualified charity in January 2011 be able to elect to have that gift be deemed to be a gift from his or her minimum required distribution taken in 2010 and thus to the extent so elected will not be a taxable minimum required distribution to the taxpayer on his or her 2010 income tax return. To read commentary by Conrad Teitell on this amendment, click here.