Taxation

Reduction Rules

The reduction rules are federal income tax rules that reduce the amount of the charitable deduction available for gifts of certain kinds of property.

Normally, the charitable deduction for a gift is based on the fair market value of the gift at the time of donation. The basic reduction rules says, however, that the deduction must be reduced by the amount of gain in the property that would not have been treated as long term capital gain if the donor had sold the property for its fair market value.

Qualified Dividends

Defined in the Jobs and Growth Tax Relief and Reconciliation Act of 2003 (JGTRRA), qualified dividends are the ordinary dividends received in 2003 or after that were subject to the same 5% or 15% maximum tax rate that applied to net capital gain. The American Taxpayer Relief Act of 2012 (signed on January 2, 2013) made qualified dividends a permanent part of the tax code but added a 20% rate on income in the new highest 39.6% tax bracket.

Publication 1459

Publication 1459 is a book of federal tables used to compute retained life estate deductions. The edition that contains tables based on Table2000CM. It is available on the Web. The edition that contains tables based on Table 90CM is called Actuarial Values, Book Gimel. The edition that contains tables based on Table 80CNSMT is called Actuarial Values, Book Alpha.

Publication 1458

Publication 1458 is a book of federal tables used to compute charitable remainder unitrust deductions. The edition that contains tables based on Table2000CM is called Actuarial Values, Book 3B. It is available on the Web. The edition that contains tables based on Table 90CM is called Actuarial Values, Book Beta. The edition that contains tables based on Table 80CNSMT is called Actuarial Values, Book Alpha.

Publication 1457

Publication 1457 is a book of federal tables used to compute charitable remainder annuity trust and gift annuity deductions and pooled income fund deductions. The edition that contains tables based on Table2000CM is called Actuarial Values, Book 3A. It is available on the Web. The edition that contains tables based on Table 90CM is called Actuarial Values, Book Aleph. The edition that contains tables based on Table 80CNSMT is called Actuarial Values, Book Alpha.

Proposed Treasury Regulations

The Treasury Department publishes Treasury Regulations, which are the official interpretation of the IRS Code that is passed by Congress. Periodically, the Treasury Department publishes proposed regulations that suggest new interpretations or clarifications of the IRS Code. After public hearings, a comment period, and an indefinite drafting, the Treasury publishes final regulations that represent its final interpretation of the issues covered in the proposed regulations.

Private Letter Ruling (PLR)

A private letter ruling or PLR is an official ruling by the IRS on a specific tax question or set of questions that it has been asked by a specific taxpayer. Although a PLR is viewed by many practitioners as an indication of how the IRS views a tax question generally, a PLR may be relied upon only by the taxpayer who requested it. A taxpayer may not cite another taxpayer's PLR as precedent when arguing his or her own tax question with the IRS.

Personal Exemption

The personal exemption is the amount by which a taxpayer can reduce his or her taxable income that is based on the number of financial dependents the taxpayer has. Typically, a married person who files jointly with his spouse can declare a personal exemption for himself, his spouse, and any financially dependent children.

For example, the personal exemption amount is $4,000 per person in 2015. If a taxpayer declares four personal exemptions for 2015, the taxpayer's taxable income will be reduced by 4 x $4,000 or $16,000.