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Nonprofit Client Advisory – New Bill May Affect Planning for 2014 Contributions

By Denise Felber, Partner at HoganTaylor and Nonprofit practice group member

On July 17, the House of Representatives passed HR bill 4719 titled “America Gives More.”  We cannot predict the possibility of if and when this bill will become law. The possibility may cause pause or changes in charitable giving by individuals and businesses.

The ten page bill included the following provisions:

Before January 1, 2014, contributions of food inventory by businesses could generate a deduction more than the basis but less than the market value of the goods.  The bill:

  • Adds a permanent extension of the provision which expired on December 31, 2013,
  • Removes the requirement regarding “wholesome” food,
  • Includes specific instructions on computing the deductible amount,
  • Increases the allowable deduction from 10% to 15% of income, and
  • Provides a five year carryover of unused deduction.

Before January 1, 2014, a temporary provision allowed taxpayers to direct a portion of their required minimum distribution to be contributed directly to designated charities.   The bill:

  • Did not change the limitation on giving ($100,000) or the trustee to trustee transfer, but
  • Adds a permanent extension of the provision which expired on December 31, 2013.

To claim a contribution, individuals must transfer assets or make payment by December 31.  The bill:

  • Allows individuals to deduct contributions made after year end and before April 15th,
  • Requires an election will be included with the return,
  • Does not include contributes made through pass through entities, and
  • Begins with the 2014 tax year (April 15, 2015).

In addition, the bill:

  • Reduces the excise tax on investment income for private foundation from 2% to 1%, and
  • Includes special provisions for conservation contributions by Native Corporations.

As we track this bill, we will provide updates.  Additional information can be found at: