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Emergency Economic Stabilization Act of 2008 Extends Charitable Giving Provisions

On Oct. 3, President Bush signed H.R. 1424, the Emergency Economic Stabilization Act of 2008 (the Act) into law. This 451-page bill establishes a $700 billion Treasury fund to purchase troubled assets from financial institutions.

The Act also includes 41 pages of tax provisions, including $17 billion in energy tax incentives, a one-year provision designed to limit the affect of the alternative minimum tax (AMT), extension of many other expired or expiring tax provisions, and tax relief for victims of recent natural disasters. The energy-related provisions are too numerous to list in this alert. For details, see this government summary.

The Act extends charitable giving provisions

The new bill provides a two-year extension on several popular charitable incentives that expired at the end of 2007:

• IRA charitable rollover. If you are age 70½ or older, you can donate up to $100,000 from your individual retirement account (IRA) or Roth IRA to qualified public charities without including those distributions in your taxable income. This benefit was available under prior law in tax years 2006 and 2007. The current law extends this benefit to tax years 2008 and 2009.
• Enhanced charitable deduction for food inventory. Businesses can claim an enhanced deduction when they contribute food inventory. The Act also eliminates the percentage limitation for certain farmers’ and ranchers’ contributions made after Dec. 31, 2007 but before Jan. 1, 2009.
• C corporations earn a larger deduction for book contributions. Under the new law, C corporations will receive an enhanced charitable deduction when they donate books to schools, public libraries and literacy programs.
• Basis stock adjustment to S corporations contributing property. If an S corporation contributes to a charity, the amount of a shareholder’s basis reduction in the corporation’s stock will equal the shareholder’s pro-rata share of the adjusted basis of the contributed property. (Under the previous law, the reduction was based on the pro-rata share of the contribution’s fair market value.)

Questions about the Act? Contact Brian Whitlock at 312-980-2941 or your Blackman Kallick representative. Read more about the Act

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.