This week, your Community Foundation Boulder County team is focusing on four primary tasks: preparing the second slate of grants to be made from our COVID-19 Response Fund Boulder County; learning about how the CARES Act will support nonprofits so we can help local groups navigate the application process; working with individual donors to help them make the most difference during this health crisis; and supporting connection among us all through TRENDS Diary.
For charitable contributions made in 2020, there is now available an unlimited charitable deduction for cash contributions to public charities, for taxpayers who itemize deductions.
Businesses frequently make cash donations to charitable organizations. But what happens to the deductibility of those donations under the state and local tax limitations imposed by the 2017 tax law?
This issue continues to be the subject of discussion, but your business clients should be encouraged by the IRS's commentary. The IRS has taken the position that a business taxpayer can usually deduct payments to a charitable entity by treating them as Section 162 ordinary and necessary business expenses. Indeed, reducing the impact of state and local taxes itself constitutes a business purpose.
The continuing relevance of this topic is a reminder that philanthropy remains a priority in advising your corporate clients.
A new decade frequently inspires closely-held business owners to start thinking about an exit strategy. Before your business-owner client starts putting out feelers to potential acquirers, be sure to counsel your client about the benefits of contributing an ownership interest to a charitable organization, especially to a flexible Donor-Advised Fund at the Community Foundation.