NJ passes law in response to SALT limits

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SuzBanyan
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NJ passes law in response to SALT limits

Post by SuzBanyan » Fri Apr 13, 2018 8:31 am

For those who reside in NJ, you may want to follow how your local government agencies respond to a new law passed 4/12/18. The law “authorizes municipality, county or school district to establish charitable funds for specific purposes; permits property tax credit for certain donations.” The text is available here: https://www.legiscan.com/NJ/bill/S1893/2018

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BolderBoy
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Re: NJ passes law in response to SALT limits

Post by BolderBoy » Fri Apr 13, 2018 11:40 am

Probably not going to help much. Federal law requires that the charity receiving the donation give a receipt to the giver of the donation and itemize out specifically if any "benefit was received" in exchange for the donation. The deductibility of the donation is then reduced by the amount of the benefit received.
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samsoes
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Re: NJ passes law in response to SALT limits

Post by samsoes » Fri Apr 13, 2018 11:43 am

BolderBoy wrote:
Fri Apr 13, 2018 11:40 am
Probably not going to help much. Federal law requires that the charity receiving the donation give a receipt to the giver of the donation and itemize out specifically if any "benefit was received" in exchange for the donation. The deductibility of the donation is then reduced by the amount of the benefit received.
Agree totally. I suggest that folks avoid this alternative until it has survived IRS scrutiny.
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TravelGeek
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Re: NJ passes law in response to SALT limits

Post by TravelGeek » Fri Apr 13, 2018 1:36 pm

BolderBoy wrote:
Fri Apr 13, 2018 11:40 am
Probably not going to help much. Federal law requires that the charity receiving the donation give a receipt to the giver of the donation and itemize out specifically if any "benefit was received" in exchange for the donation. The deductibility of the donation is then reduced by the amount of the benefit received.
As this isn't exactly a secret, I cannot imagine that the law makers who worked on that bill wouldn't have considered that.

But I am not a lawyer, accountant or even NJ resident, so I am just going to observe this from afar.

skepticalobserver
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Re: NJ passes law in response to SALT limits

Post by skepticalobserver » Fri Apr 13, 2018 1:49 pm

a step-transaction, no?

EddyB
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Re: NJ passes law in response to SALT limits

Post by EddyB » Fri Apr 13, 2018 2:00 pm

Much of the prior discussion of NY's law is relevant here.

viewtopic.php?t=246117

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FIREchief
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Re: NJ passes law in response to SALT limits

Post by FIREchief » Fri Apr 13, 2018 3:19 pm

Sounds like a money maker for the treasury. Now, besides ultimately collecting the full taxes due, the government will further benefit from penalties and interest.
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MossySF
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Re: NJ passes law in response to SALT limits

Post by MossySF » Sat Apr 14, 2018 1:41 am

Hmmm, I'm not sure if it's not worth it to try it if you get a more favorable result.

Afterall if it fails in court, you just owe what you would have owed plus interest.

SuzBanyan
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Re: NJ passes law in response to SALT limits

Post by SuzBanyan » Sat Apr 14, 2018 1:48 pm

MossySF wrote:
Sat Apr 14, 2018 1:41 am
Hmmm, I'm not sure if it's not worth it to try it if you get a more favorable result.

Afterall if it fails in court, you just owe what you would have owed plus interest.
Even before the 2017 tax law, many states had tax laws that allowed state tax credits for taking charitable contributions. Since 1986, AMT treated deductions for state and local taxes differently. “As a result, from 1987 onward, taxpayers subject to the federal AMT have found it advantageous to make charitable gifts generating state tax credits.” Neither the IRS nor any court has determined that the value of the contribution should be reduced by the value of state tax credits or deductions. For more on the current law, you can read: https://ssrn.com/abstract=3098291

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Artsdoctor
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Re: NJ passes law in response to SALT limits

Post by Artsdoctor » Sat Apr 14, 2018 2:17 pm

Suz,

You're correct. To say that you cannot take a charitable contribution in its entirety "if you get something in return" is not true. California has had this program for several years and I'm not aware of any IRS challenge.

https://www.ftb.ca.gov/individuals/Coll ... edit.shtml

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