Inside:

• Newsletter, January 2007
• Before buying a hybrid vehicle . . .
• Key changes to charitable contributions
• Life insurance trusts
• Numbers for 2006 and 2007

Key changes to charitable contributions

The following are key charitable contribution changes made by the Pension Protection Act of 2006 (signed into law on August 17, 2006) that may affect the 2006 return and the 2007 tax year:

• For 2006 and 2007, an IRA owner who is age 70 1/2 or over can directly transfer tax-free up to $100,000 per year from an IRA to an eligible charitable organization. Amounts transferred are not taxable and a deduction can't be claimed for the amount given to the charity. Transferred amounts are counted in determining whether the owner has met the IRA required minimum distribution rules.
• Clothing and household items (e.g., furniture, furnishings, electronics, appliances, and linens) donated to charity after Aug. 17, 2006 is deductible only if it is in good used condition or better. However, you may claim a deduction of more than $500 for any single item, regardless of its condition, if you include a qualified appraisal of the item with your income tax return.
• After 2006, individuals can't deduct any charitable donation of money unless they have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. A bank record includes canceled checks, bank or credit union statements and credit card statements. Bank or credit union statements should show the name of the charity and the date and amount paid. Credit card statements should show the name of the charity and the transaction posting date.