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Saturday September 23, 2017

Washington News

Washington Hotline

Tax Reform 'Blueprint' Promised

Treasury Secretary Steven Mnuchin has been holding "Big Six" meetings to plan tax reform. The "Big Six" are Treasury Secretary Steven Mnuchin, White House Economic Council Director Gary Cohn, Senate Majority Leader Mitch McConnell, Speaker of the House Paul Ryan, Senate Finance Committee Chair Orrin Hatch and House Ways and Means Committee Chair Kevin Brady.

In a media appearance on August 31, Munchin stated the plan is "not a 100-page bill with every single detail," but it is a specific and extensive description of tax reform.

President Trump discussed tax reform on August 30 in Springfield, Missouri. He outlined four tax reform principles.
  1. Fair and Simple - Since the last comprehensive tax reform in 1986, the tax code has tripled to 2,600 pages. Over 90% of taxpayers need professional help to complete their return. The tax reform goal is to provide a return "on a simple, single page."

  2. Competitive for Jobs - The 1986 tax code reduced the top corporate rate to 34%, which was one of the lowest rates at that time in the first world. The U.S. corporate rate now is the highest among industrial nations because all of the others have lowered their rates. As a result, companies and jobs are moving to China and other nations. The tax reform bill must lower business tax rates in order to compete for jobs.

  3. Middle Class Tax Relief - Tax reform will be intended to reduce taxes "for middle-income Americans."

  4. Overseas Corporate Cash - With high U.S. corporate tax rates, over three trillion dollars in cash is held overseas by American corporations. Tax reform is designed to encourage the American companies to return cash to America and invest to increase employment.
Ways and Means Committee Ranking Member Richard Neal (D-MA) responded to the Trump speech on taxes. Neil described the speech as "vague, decades-old talking points." He continued, "Democrats believe that now is the time to act on comprehensive tax reform. We stand ready to work in good faith with Republicans on real tax reform that provides tax relief and expands opportunity for middle-class families, closes the skills gap and promotes middle-class job growth."

Editor's Note: The Senate Finance Committee and House Ways and Means Committee are both expected to have tax reform hearings during September. However, the House and Senate legislative calendar is limited. An independent poll of American business leaders indicated that only 10% expect tax reform to be completed in 2017.

Hurricane Harvey Tax Relief


The National Weather Service (NWS) officially reported Hurricane Harvey rainfall of 49.32 inches in the southeast Houston area. This is a record for a storm in the continental United States.

The storm caused widespread flooding in both Texas and Louisiana. Over 14 NWS reporting stations had 40 or more inches of rain.

In response to the natural disaster, the IRS published letters with two types of tax relief. IRS Commissioner John Koskinen stated, "This has been a devastating storm, and the IRS will move quickly to provide tax relief to hurricane victims. The IRS will continue to closely monitor the storm's aftermath, and we anticipate providing additional relief for other affected areas in the near future."

In IR-2017-135, the Service granted an additional extension for taxpayers and business. Many individual taxpayers had previously extended their 2016 filing date to October 16. Some businesses were on extension to September 15. Texas residents in the 18 affected counties may now file by January 31, 2018.

In IR-2017-138 and Announcement 2017-11; 2017-39 IRB 1, the Service relaxed rules on hardship loans or distributions from retirement plans.

The IRS has streamlined loan procedures for retirement plans under Sec. 401(k), Sec. 403(b) and Sec. 457(b). The streamlined rules enable plan participants to access funds more quickly.

While IRAs do not permit loans, there also will be streamlined plans for hardship distributions from IRAs.

The IRS cautions that the income tax treatment will remain unchanged. The IRS stated, "Retirement plan loan proceeds are tax-free if they are repaid over a period of five years or less. Under current law, hardship distributions are generally taxable and subject to a 10% early-withdrawal tax."

Signed Deed is Contemporaneous Written Acknowledgment


In Big River Development LP et al. v. Commissioner; No. 16767-14; T.C. Mcmo. 2017-166 (27 Aug 2017), the Tax Court held an easement deed with signatures by both donor and charity constituted a contemporaneous written acknowledgment under Sec. 170(f)(8)(A). Big River Development, L.P. (LP) acquired a Pittsburgh historic property originally named the Armstrong Cork Building. LP planned to develop the property into luxury apartments.

On January 12, 2005, LP deeded a historic preservation easement to the Pittsburgh History Landmark Foundation (PHLF). The PHLF president also signed the deed and had it recorded in January 2005.

LP promised a gift of $93,500 to cover the oversight responsibility of PHLF. The deed included the standard "ten dollars and other good and valuable consideration" language.

LP obtained a qualified appraisal and reported a $7.14 million charitable deduction. In March 2007, PHLF also sent a contemporaneous written acknowledgment letter to LP. The letter stated that no goods or services had been provided and acknowledged the receipt of the $93,500 as a gift to cover the cost of monitoring services.

The IRS denied the deduction and claimed there was no contemporaneous written acknowledgement. It issued a final partnership administrative adjustment (FPAA) and assessed a 40% penalty for a gross valuation misstatement.

The Tax Court noted Sec. 170 (f)(8)(B) has specific requirements. The contemporaneous written acknowledgment must list the cash or property given, explain any goods or services provided by the donee organization and, if applicable, estimate a good faith value of the provided goods or services.

While PHLF did provide a contemporaneous written acknowledgment two years after the gift, this did not qualify and therefore was disregarded. However, the deed of easement described the transfer, the $93,500 gift for monitoring services and emphasized that this was the "entire agreement" between the parties.

Therefore, the deed that was acknowledged by the PHLF president did substantially comply with the Sec. 170(f)(8)(A) contemporaneous written acknowledgment requirements.

Applicable Federal Rate of 2.4% for September -- Rev. Rul. 2017-17; 2017-36 IRB 1 (18 Aug 2017)


The IRS has announced the Applicable Federal Rate (AFR) for September of 2017. The AFR under Section 7520 for the month of September will be 2.4%. The rates for August of 2.4% or July of 2.2% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2017, pooled income funds in existence less than three tax years must use a 1.2% deemed rate of return.

Published September 1, 2017
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Shelby Harder, 2018
Dr. Irving Auld and Dorothy
Roher Auld Scholarship

"Many students take for granted what a university has to offer. However, I am thankful every single day for the opportunity to attend this prestigious school. At Lawrence, you have the ability to engage in Socratic debates about the world we live in at dinner, play recreational or NCAA sports, and talk one on one with brilliant professors. At Lawrence, you don't just 'learn' a subject, you are immersed in it. You dive into the liberal arts and these professors show you the beauty in it all, and how everything is tied together. I am a Biochemistry major with a soft spot for rocket science, philosophy, and evolution. Lawrence is my dream school, and it would have never been possible without the Dr. Irving Auld and Dorothy Roher Auld Scholarship. I am forever grateful for their generosity."

Max Loebl, 2017
Grace Gates Scholarship and Schade Family Scholarship

"Lawrence has been a life changing opportunity. My experience here is made possible by the Grace Gates Scholarship and the Schade Family Scholarship. I will always be grateful for the generosity that made my life at Lawrence a reality. I am incredibly thankful for the amazing education and lifelong connections I have made here. Beyond a doubt, my time at Lawrence has been a multifarious experience; playing varsity soccer, working in the Volunteer and Community Service Center, and now serving as the President of the Lawrence University Community Council. The times spent at Lawrence will be carried with me and cherished for the rest of my life."

Magdalen D'Alessio, 2017
Lillian Seybold Wells Memorial Scholarship

"Hello, my name is Magdalen D'Alessio, I'm majoring in Psychology and minoring in Education Studies and History. I am extremely thankful to be a recipient of the Lillian Seybold Wells Memorial Scholarship as I have been able to further my education and pursue my extracurricular interests, including Dance Team, and participating in the many International programs offered on campus. I'm really glad to be able to attend Lawrence and hope to expand my knowledge of the world even further! In the near future, I plan to conduct an independent study regarding the relationship between the government and school systems and the importance of parental involvement!"

Joe Johnson, 2017
Amy Aplin Larsen Scholarship

"The Amy Aplin Larsen Scholarship has allowed me to pursue tons of opportunities at Lawrence as part of a liberal arts education. I have been able to take classes from close to a dozen different academic departments, perform in ensembles and theatre productions, and take part in shaping the Lawrence community. Regardless of what field I may go into, the connections I have made here at Lawrence with staff, faculty, and friends have been invaluable. Thank you!"

Milwaukee-Downer Scholarships and Professorships

Some of the many recipients of Milwaukee-Downer scholarships gather for a photo with Carolyn King Stephens M-D'62 and Marlene Crupi-Widen M-D'55 in January 2014 at the annual scholarship luncheon.

Rosamund Victoria Bille Adler Scholarship
Dr. Charles E. Albright Scholarship
Helen Daniels Bader Scholarship
James G. and Ethel M. Barber Scholarship
Catharine Beecher Endowed Fund for Downer Women
Bessie A. Bell Scholarship
Berk Scholarship
Frederick C. Best Scholarship
Beta Study Club Scholarship
Lynde Bradley Scholarship
Lucia R. Briggs-Alumnae Scholarship
Edith Lange Brooks Scholarship
Anne Barman Caldwell Scholarship
Alice Miller Chester Scholarship
City of Milwaukee Student Funds Scholarship
Milwaukee-Downer Class of 1940 Fund
Milwaukee-Downer Class of 1942 Fund
College Endowment Association Scholarship
Janet Cope Crawford Scholarship
Jessie Mabbott Daniels Scholarship
F. T. Day Scholarship
Rufus Dodge Scholarship
Julia P. Ely and Hannah R. Vedder Memorial Scholarship
General Endowed Scholarship - M-D College
Dr. Alfred W. and Mrs. Ada F. Gray Scholarship
Berenice E. Hess Scholarship Endowment
Lucille Ray Hibbard Scholarship
Belle Austin Jacobs Scholarship
Helen McDermott Jurack and Ronald J. Mason Scholarship
Marjorie S. Logan Scholarship
Nellie Maxwell Scholarship
S. Annabelle & Paul McGuire Scholarship
Memorial Scholarship Fund - Milwaukee-Downer
Milwaukee-Downer Class of 1953 Scholarship
Milwaukee-Downer Class of 1955 Scholarship
Milwaukee-Downer Class of 1956 Scholarship
Milwaukee-Downer Class of 1957 Scholarship
Milwaukee-Downer Class of 1958 and 1959 50th Reunion Scholarship
Milwaukee-Downer Club Scholarship
Milwaukee-Downer/Lawrence College Consolidation 50th Anniversary Scholarship
Francis Evelyn Kelley Morgan Memorial Scholarship
O'Neill-Anderson Family Scholarship Endowment
Elizabeth A. Olson Scholarship
Gilbert Haven Peirce, Sr. and Emma Elizabeth Manor Peirce Milwaukee-Downer Scholarship
Aleida J. Pieters Scholarship
Matilda Siefert Puelicher Scholarship
Elizabeth Ann Richardson Scholarship
William M. Ross Memorial Scholarship
Elizabeth Rossberg Scholarship
Charles Frederic Sammond Scholarship
Mildred L. Schroeder Scholarship
Sivyer Educational Fund for Women
Marion Merrill Smith Scholarship
Dr. Elizabeth A. Steffen Scholarship
W. Mead and Elizabeth McKone Stillman Scholarship
Strzelczyk Family Scholarship
Clare Scherf Sweetman Scholarship
Raymond H. and Jane K. Taylor Scholarship
Jerline E. Walfoort Memorial Scholarship
Barbara E. Wehr Fund
Harmony Weissbach Scholarship
Martha and Frances Wheelock Scholarship
James G. and Ethel M. Barber Professorship of Theatre and Drama
T. A. Chapman Professorship in Music
Alice G. Chapman Professorship in Physics
Alice G. Chapman Librarianship
Milwaukee-Downer College and College Endowment Association Professorship

Kaitlin Yorde, 2017
Maurine Campbell Endowed Scholarship

"I am so thankful to be a recipient of the Maurine Campbell Scholarship. I am the first person in my family to attend a four-year college, and this would not be possible without the scholarships I receive. At Lawrence there are so many wonderful opportunities and learning experiences available. This summer I was able to participate in research in my field and have also been able to get involved with the Appleton community through ESL tutoring at the Fox Valley Literacy Council. I am sure that the Lawrence education I have received will continue to benefit me for the rest of my life!"

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