Jimmy J. Chen Certified Public Accountant

1. Jimmy J. Chen Certified Public Accountant Tax Seminar

2. More Beneficiaries Can Roll Over Money from Deceased Person’s Retirement Plan

3. Directly Deposit Your Tax Refund Into IRA

4. New Inflation Adjusted Phaseout Ranges for IRA Contributions

5. Beginning in 2008:Direct Rollovers from Retirement Plans Into Roth IRAs Allowed

6. Employers Can Actually Enroll Workers for 401 (k) Contributions

7. Retirement Plan Providers Can Offer Investment Advice

8. Taxpayer- Friendly Retirement Plan Rules Are Now Permanent

9. Taxpayer- Friendly Retirement Plan Rules Are Now Permanent

10. Made Permanent: Taxpayer- Friendly Rules for Section 529 Plans

11. New Rules for Charitable Donors and Charitable Organizations

12. Beginning Now: Seniors Can Make Donations Directly Out of IRAs

13. Beginning Soon: All Cash Donations Must be Documented

14. Beginning Now: Stricter Rules for Donated Clothes and Household Stuff

15. WHAT IS A PRIVATE FOUNDATION?

16. Private foundations are generally founded by an individual, a family or a group of individuals, and are organized either as a nonprofit corporation or as a charitable trust. You can appoint yourself, as well as other family members or friends, to sit on the foundation’s governing board.

17. One common form of a private foundation is a family foundation. Families sometimes use a family foundation as a forum in which family members can work toward common goals, or as a way to instill the value of charitable giving in future generations of the family. Another common option that families use to accomplish the goals of their family philanthropy is to establish a donor advised fund at a community foundation.

18. Since a private foundation is a charitable organization, it is exempt from federal income tax on its income, although it must pay an excise tax on its net investment income. The gifts you make to establish a new foundation or grow an existing foundation can afford you certain tax advantages; income, gift and estate tax deductions are available under the law.

19. TYPES OF PRIVATE FOUNDATION

20. There are three main types of private foundations: private endowed foundation, pass-through foundation, and private operating foundation.

21. Private Endowed Foundation

22. This is the most common type of private foundation. The foundation’s financial assets create a principle- or endowment- that is invested, and income from the endowment is paid out annually to charity. Generally, the principal or endowment is not spent, only the investment income. Therefore the principal can increase with good investment, ensuring the foundation’s continuation and growth to meet future community needs. Private foundations are required by law to pay out annual grants and other qualifying distributions totaling a minimum of 5 percent of the fair market value of their assets.

23. Pass-ThroughFoundation

24. A pass through foundation is a private grantmaking organization that distributes all of the contribution it receives each year ( not just 5 percent of its assets). The pass-through option may be made or revoked on a year-to year basis.

25. Private OperatingFoundation

26. A private operating foundation uses the bulk of its income to actively run its own charitable programs or services. Examples include the operation of a museum, library, research facility or historic property. Some private operating foundations also choose to make some grants to other charitable organizations.

27. Frequently Asked Question of Private Foundation

28. How long does it take to get my new foundation?

29. Normally, you will have a foundation within 24 hours.

30. How much should I put into my foundation?

31. There is no limit to how much you can put into your foundation. If your goal is to get the largest income tax deduction possible, you should consider putting 30% of your pre-tax income into your foundation. If your goal is to build the largest foundation or avoid estate tax, you may wish to select a percentage of your net worth -- 25%, for example-- to put into your foundation. However, you should always consider the tax implications of your specific situation.

32. What makes my foundation tax exempt?

33. Technically, your foundation will be a not – for – profit corporation, which qualifies as a tax- exempt charity under section 501 (c) (3) of the Internal Revenue Code.

34. Are there any limits on what my foundation can do?

35. Yes. We manage your foundation to ensure that you do not do anything that is prohibited. Generally speaking, your foundation may not engage in business transactions with you, members of your family, your company, or your employees. For example, your foundation could not own a significant piece of your business, nor could it buy assets from you or sell assets to you. An important exception to this rule is that your foundation may hire you or members of your family to perform work for the foundation.

36. Can my foundation hire me or my children?

37. Yes. The compensation that is paid to the employee must be reasonable for the work performed.

38. What charities can I give to?

39. You can give to any charity which is recognized by the IRS as a public charity. Of course, there are thousands and thousands. Generally this includes churches and synagogues, hospitals, schools, universities, most scientific and educational organizations, museums, symphonies, opera companies, poverty relief groups, homeless shelters, environmental organizations, etc. In certain circumstances, your foundation can also give donations to foreign charities that could not be deductible if those donations were given by an individual.

40. Do I have to give money to charity each year?

41. Yes. You can give as little as 5% of your foundation’s average net assets to charity each year. Of course, you can give more. Many foundations elect to give the minimum in the early years. This allows the foundation to grow more rapidly until the founder finds the time to devote himself or herself more fully to philanthropy.

42. Can I manage the money myself or pick a money manager myself?

43. Yes. The only limitation on how you can invest the money is that you may not invest it in so- called “jeopardy investments.” In practice, this is very rarely an issue.

44. What do I have to do each year?

45. You don’t have to do very much at all. The only things you must do are decide what charities to support, and occasionally sign documents.

46. Where will my foundation’smoney be physically?

47. You decide which firm will hold your foundation’s money. It can be at the same place where you have your stocks, bonds, mutual funds or other accounts.

48. How do I get  account statements?

49. You will get account statements directly from the bank, brokerage firm, or money management firm which holds your foundation’s assets.

50. How will I know how much to give away each year?

51. The general rule is that your foundation must give away 5% average net assets each year. We will calculate the amount for you, and advise you months in advance of the deadline.

52. Is there a minimum amount I must keep in my foundation?

53. No. However, you might want to keep in mind that there are minimum coasts associated with running your foundation.