The ABA Tax Section has released comments in response to to Notice 2017-73, which requested comments on approaches being considered by Treasury and the Service to address certain issues regarding donor advised funds.
Key points in the Tax Section Comments are as follows.
- Request for confirmation that donor advised fund distributions will not be considered to confer a “more than incidental benefit” when payments to purchase tickets or a membership from a charity is bifurcated so that the amount distributed by the donor-advised fund does not exceed the portion of the ticket cost that would be deductible under Code Section 1702 if paid by the donor-adviser directly and the donor-adviser pays for the nondeductible portion separately.
- Recommendation for the issuance of regs providing that distributions from a donor-advised fund to a charity fulfilling charitable pledges to the same charity would not be considered to result in a more than incidental benefit to a donor-adviser under Code Section 4967.
- Recommendation of no action regarding the potential use of donor-advised funds to circumvent the public support limitations under Code Section 170.
- Recommendation that Section 4958 regs be amended to conform to Notice 2017-73 by specifying that fulfillment of a pledge will not be treated as an excess benefit transaction and to ensure that the tax code and regs are consistent regarding the fulfillment of charitable pledges by donor-advised funds.
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.