Global Church of the Nazarene Foundation - Model Generosity - Leave a Living Legacy through Planned Giving for Saturday, 8 March 2014

Global Church of the Nazarene Foundation - Model Generosity - Leave a Living Legacy through Planned Giving for Saturday, 8 March 2014
"My command is this: Love each other as I have loved you. Greater love has no one than this: to lay down one's life for one's friends."--John 15:12-13 (NIV)
The Church of the Nazarene Foundation is blessed to be able to view the love that you have for your friends - the Body of Christ.  With your support, ministries are able to spread His Word and make Christlike disciples. 
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Blessings,
Kenneth R. Roney, J.D.
President
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PERSONAL PLANNER
Gifts of Land
Many friends of charities have benefited from a gift of land or a gift of land with a building or other structure. There are two main benefits for this gift. First, there is a charitable deduction, normally for the fair market value at the time of the gift. Second, if the real estate has appreciated the gift to a qualified public charity bypasses or avoids the capital gains tax.
The combination of a substantial charitable deduction and a bypass of capital gain is an excellent double benefit. Many donors who sell other property or have substantial income will be able to use this charitable deduction to reduce their income taxes.
There are several reasons why you might consider a gift of property. You may have recently sold another property and could use the charitable deduction. If you have commercial or rental real estate, eventually your rental income increases while your depreciation is gradually reduced. With increased rents and reduced depreciation, you may have a very substantial income tax problem.
Lisa's Land and the Developers
Lisa purchased property 10 years ago for $100,000. It was vacant land in a commercial area and now has a value of $200,000. She has paid off the debt and it is now free and clear. Lisa contacted her CPA Susan because she had started to receive some inquiries about the property from a developer. The developer was interested in building a commercial building on the property.
Lisa: "I have owned this property for 10 years and it has now appreciated. With that appreciation, will I pay a large tax if I sell the property?"
Susan: "Yes, Lisa. You purchased it for $100,000 and it is now worth $200,000. You will pay the federal capital gains tax plus a state capital gains tax because you live in a state that levies that tax. You should also consider that you have already sold another property and have a very large capital gain this year."
Lisa: "Yes, I have been thinking about that other sale. With that large capital gain, I sure could use a large charitable deduction. What would happen if I give this property to charity?"
Susan: "You can transfer a property to charity the same way that you would sell the property, by signing a deed to transfer the property to the charity. The deed will be recorded and you can qualify for a charitable deduction. The $200,000 deduction would offset a substantial part of your gain. We might be able to offset the entire capital gains tax payable on the other sale that you completed earlier this year. In addition to your income tax deduction that will offset tax on that other sale, you bypass the gain on the gift of this property. With both tax benefits, you will save about $100,000."
Lisa: "Great! That's almost as much as I paid for it in the first place. Plus, I could help my favorite charity with a very nice gift this year. That sounds like just the ticket for me."
Lisa contacted her favorite charity and deeded the land to that nonprofit. She was careful to be certain that she had not signed a contract or agreed to a sale of the property before the gift. After the deed was recorded, the charity then made contact with several developers and sold the property for $200,000.
Bill's Declining Depreciation Solution
Another gift option could be a gift of a commercial property. Bill bought a small commercial building 14 years ago for $200,000. During that period of time, he paid off the debt. His CPA Tom took straight-line depreciation and his cost basis in the building is now $120,000. Fortunately, over that period of time the property appreciated to a value of $320,000.
Bill owns many rental homes and commercial buildings and receives rental income on those properties. Because he has owned them for quite a few years, the depreciation deductions are now lower and his rental income continues to go up. As a result, Bill now has a large income and pays a very large income tax.
Bill Meets with His CPA Tom to Discuss his Plans for This Year.
Bill: "You know, Tom, I keep getting better rents every year, but I now have less and less depreciation. The income taxes are going to wallop me this year."
Tom: "Yes, Bill. Because you've owned properties for quite a long period of time, your income is now much more than the depreciation and your taxes are going to be much higher."
Bill: "Well, maybe I should just give this rental home to my favorite charity. They are in the middle of a fairly large fund drive and could sure use the gift. Would that help?"
Tom: "Yes, you would receive a very substantial deduction. The current value of that building is about $320,000. That deduction could save taxes this year, and perhaps for the next two or three years. You can take that kind of charitable deduction over as many as six years. Based on your tax situation, I think you could take the deduction over about three years. This would save over $100,000 in income taxes. In addition, by giving it to charity you would not pay tax on the $200,000 of gain in that rental home, which represents a savings of another $40,000 or more."
Bill: "This sounds like a very good plan. I have been looking for ways to reduce my taxes and help my favorite charity with that fund drive. Let's go ahead and do this."
Appraisal Requirements
Lisa and Bill both decided to make gifts of property to a favorite charity. These gifts will offset the large capital gain for Lisa and the higher income for Bill. However, for a gift of property valued at more than $5,000 they will need a qualified appraisal.
Their CPAs secured the services of Arnold Appraiser. He is certified as a Member of the Appraisal Institute (MAI) and specializes in real estate appraisals. Arnold appraised both properties and gave the two CPAs the appraisals, complete with comparables and other important appraisal information.
CPA Susan and CPA Tom also had the charities and Appraiser Arnold sign an IRS Form 8283. This form is necessary to qualify them to report the charitable deductions on their tax returns.
After making these two gifts of property, Lisa and Bill enjoyed both major benefits. They saved very substantial income taxes and also bypassed the capital gain on the property that was gifted. A gift of land can be a very fine gift with great benefits both for the donors and for the charitable organization.
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SAVVY LIVING
How to Guard Against Robocall Scams
Is there anything that can be done to stop the annoying robocalls my husband and I keep getting? It seems like we get two or three a day offering lower credit card interest rates, medical alert devices, home alarm systems and more. What can you recommend?
There has been a huge spike in robocall scams in the U.S. over the past few years. In fact, the Federal Trade Commission (FTC) gets more than 200,000 complaints every month about this widespread problem. Here's what you should know along with some tips that can help you protect yourself.
Robocall Scams
You are answering a robocall whenever you pick up the phone and hear a recorded message instead of a live person.
You have probably received robocalls regarding candidates running for office or from charities asking for donations. These robocalls are legal and allowed. However, the robocall is illegal if the recording is a sales message and you have not given written permission to receive calls from the company. Since these calls are illegal, the likelihood is high that the substance of the call is a scam and not a legitimate offer.
Some common robocall scams include offers for lower credit card interest rates, mortgage relief, a free vacation, medical alert devices or home security systems. Another very common scam is to falsely notify you about changes in your health benefits or bank account. Also, be aware that new scams are constantly evolving. However, regardless of the form, all of these scams have the end goal of obtaining your personal and financial information.
The reason for the spike in robocalls is technology. Fraudulent robocallers use auto-dialers that send out thousands of phone calls per minute for low cost and are very difficult to trace. When these kinds of calls are received, your caller ID either displays a "spoofed" (fake) number or just identifies the caller as "unknown."
Protect Yourself
Your first step to limiting at least some unwanted calls is to make sure your phone number is registered with the National Do Not Call Registry (see donotcall.gov or call 888-382-1222). This, however, will not stop telemarketing scams or illegal robocalls.
If you have a caller ID, you can simply refuse to answer the phone unless you recognize the number. If you do answer and you recognize that it is a robocall then just hang-up the phone. Sometimes the call will ask you to press one to speak with a live operator, to complain about the call or to remove your number from the list. Do not press any numbers. If you respond by pressing any number at all, you are letting the autodialer know it has reached a live number. This will result in more robocalls.
You should also consider contacting your phone service provider. Ask them if they can block the number and whether they charge for that service. This might help for a period of time, however, telemarketers change caller ID information often. So, if your service provider charges to block numbers then it might not be worth paying a fee to block a number that will change.
Another call blocking option you should check into is Nomorobo. This is a free service and works only for people who have an Internet-based VoIP phone service. Anyone with phone service from Comcast and Time Warner Cable can use it too. Nomorobo uses a "simultaneous ring" service that detects and blocks robocalls on a black list of known offender numbers. It isn't 100% foolproof, but it is an extra layer of protection. To sign up or to see if Nomorobo works with your phone service provider visit Nomorobo.com.
It's also important that you report illegal robocalls you receive to the FTC at ftccomplaintassistant.gov or call 888-382-1222.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Senior" book. The articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070.
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YOUR PLAN
Bequests
Joe and Anna have been faithful supporters of our organization. They believe it is important to support and encourage our mission.
Joe: Several years ago, Anna and I decided to become part of the organization's mission. We believe that they are truly helping others. We think that it is important to partner with them to make a difference. For that reason, Anna and I have made gifts over the years to help others.
Anna: We wanted to do more than to just make gifts. Joe and I have been careful over the years and have accumulated some resources. We plan to be generous with family, but we also have the ability to be generous with charity.
After talking it over, we decided to leave a bequest in our will. Our attorney took the simple language available from the organization and included a nice bequest. We are delighted that we will be helping others through them.
You also may want to make it easy and convenient to have a bequest included in your will. The language link below shows how a bequest can very easily be included in your will.
You might find it helpful to print this page and the bequest language. Please feel free to give this information to your attorney. If he or she has any questions, please contact us.
Click Here to review sample bequest language.
*Please note: The name and image above is representative of a typical donor and may or may not be an actual donor to our organization. Since your benefits may be different, you may want to click here to view a color example of your benefits.
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WASHINGTON NEWS
White House Releases 2015 Budget
On March 4 the White House released the proposed federal budget for 2015. That fiscal year will commence on October 1, 2014. The proposed budget includes both new benefits and new taxes.
1. Earned Income Tax Credit – The White House budget proposes that single persons with modest earned income could benefit from a maximum credit up to $1,000. The estimated $60 billion cost of this program could benefit 13.5 million workers. The cost is offset by taxing hedge fund managers on their income at ordinary rates rather than capital gains rates for the "carried interest."
2. Retirement Plans – The myRA plan and other automatic IRA accounts would potentially encourage 13 million workers to fund accounts for their retirement.
3. Pell Grants – Education grants for college students would not be taxed.
4. Infrastructure – There would be a four year plan to fund infrastructure throughout the nation with a projected cost of $302 billion.
There are several major tax provisions, with three primary revenue-raising proposals.
1. Large Banks – Banks with over $50 billion in assets would be subject to a new tax on liabilities. The White House noted that a tax on large banks and financial institutions has now been proposed both in this budget and in the tax reform bill by Chairman of the House Ways and Means Committee Dave Camp (R-MI).
2. 28% Deduction Cap – The upper income individuals who are in the 35% and 39.6% tax brackets would first face the "Pease" 3% floor on itemized deductions and then would also have a 28% cap that reduces their deduction tax savings. In effect, a portion of their itemized deductions would be eliminated under this rule.
3. Buffett Tax – The 30% minimum tax on upper income taxpayers known as the "Buffett tax" would be implemented.
As is quite common, there were multiple comments and observations by leaders of both parties. The major comments were made by the White House and both Senate and House Budget Chairs.
The White House published a press release and emphasized that the budget "invests in infrastructure, job training and pre-school; cuts taxes for working Americans while closing tax loopholes enjoyed by the wealthy and well-connected; and reduces the deficit."
Sen. Patty Murray (D-WA) is Chair of the Senate Budget Committee. She noted, "The two-year bipartisan budget deal signed into law in December was a strong step in the right direction, but it shouldn't be the last step we take. So while the American people have a budget in place and the certainty they deserve that there won't be another budget crisis through the end of 2015, we in Congress owe it to them to work together to build on that bipartisan foundation."
Chairman of the House Budget Committee Paul Ryan (R-WI) stated, "The President's budget is yet another disappointment – because it reinforces the status quo. It would demand that families pay more so Washington can spend more. It would hollow out our defense capabilities. And it would do nothing to preserve or strengthen our entitlements."
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FINANCES
Stocks - Adidas Finishes Strong
Adidas Group (ADS.DE), a company that designs, manufactures and sells athletic and sports products worldwide, reported its annual earnings for Fiscal Year 2013 on Wednesday, March 5. The world's second largest sports apparel and accessories company reported a slight dip in sales, but strong earnings.
Adidas reported net sales of $20.07 billion during Fiscal Year 2013. This represents a decrease of 2.6% from Fiscal Year 2012 sales of $20.61 billion.
The company reported net income of $1.09 billion for the year. This represents an increase of 49.3% from the previous year's net income of $728.40 million. Earnings per share for the year came in at $5.21 per share.
CEO of Adidas Group, Herbert Hainer, reflected on Fiscal Year 2013 in a letter to shareholders. "In a marathon, every inch of every mile counts. In this spirit, I am pleased to report that our Group finished 2013 strongly. We delivered an exceptional fourth quarter result, with robust currency-neutral sales growth of 12% and operating profit, excluding goodwill impairment losses, increasing almost fourfold compared to the prior year. That's a new fourth quarter record for our Group. And this strong finish puts the Group in a great position as we begin an exciting 2014 for our brands and for our Group."
Last October, Adidas reported that it will begin changing its management team in North America and Western Europe. Growth has been slow in these regions for the past several years and it is beginning to lose market share in key markets to rival Nike. A "generation change" is now viewed as beneficial for company performance. In January, Eric Liedtke replaced Erich Stamminger as Head of Brands on the company's Executive Committee. Erich Stamminger had been with Adidas for 30 years. On March 4, the company announced that CEO Herbert Hainer will continue with the company for another two years during which time Hainer and the other executives will work on a succession plan. Igor Landau, Chairman of the Adidas Supervisory Board, stated, "We will continue to pursue the generation change which has already been initiated within the Group's management team, thus preparing the company for the next era of success."
Adidas Group (ADS.DE) shares ended the week at $80.36, down 2.2% for the week of 3/3.
PetSmart's Earnings Impress
PetSmart (PETM), a retailer of products, services and solutions for pets, reported its fourth quarter and Fiscal Year 2013 results on Wednesday, March 5. PetSmart reported year-over-year increases in revenue as well as net income and beat analysts' estimates for earnings per share.
The company reported quarterly and annual revenue of $1.8 billion and $6.9 billion, respectively. Annual revenue in Fiscal Year 2013 increased 2.34% over last year when revenue was $6.76 billion.
PetSmart reported quarterly net income of $131.52 million and annual net income of $419.52 million. Annual net income increased 7.7% in Fiscal Year 2013 from Fiscal Year 2012 when annual net income was $389.53 million. Also, PetSmart reported annual earnings per share of $4.02. This beat analysts' expectations that earnings per share for the year would be between $3.88 and $3.98.
"We are pleased to report our results for Fiscal Year 2013, marking the fourth consecutive year of double-digit earnings per share growth," said David Lenhardt, CEO of PetSmart. "I would like to thank our associates for their hard work and caring for our customers and communities."
PetSmart provides many pet products and accessories. The company also provides grooming, training and pet care services. In order to boost sales, PetSmart just announced that it will offer more natural and raw pet food as well as more grooming services. For example, those who wish their dog's fur was more colorful can now color it with washable chalk at PetSmart's grooming salons.
PetSmart (PETM) shares ended the week at $68.70, up 2.9% for the week of 3/3.
Costco Growth Slows
Costco Wholesale Corporation (COST), operator of membership warehouses, reported its latest quarterly results on Thursday, March 6. While sales increased by almost 6%, the company reported a drop in net income compared to last year as margins tightened.
Costco reported revenue of $26.31 billion for the quarter. This represents an increase of 5.77% over the same period last year when the company reported revenue of $24.87 billion.
The company reported net income of $463 million for the quarter or $1.05 per share. This represents a decrease from the comparable quarter last year when the company reported net income of $554 million or $1.24 per share.
"Despite satisfactory sales results during the second fiscal quarter several other factors led to lower earnings," said Richard Galanti, CFO of Costco. "These factors included: weaker sales and gross margin results in certain non-foods merchandise categories, particularly during the four-week holiday selling season; weaker gross margins in our fresh foods business; and lower reported international profits, resulting from significant weakening of foreign exchange rates. The first four-week period of the quarter represented the majority of earnings underperformance in the quarter."
Costco currently operates warehouses in the United States, Canada, Mexico, the United Kingdom, Japan, Taiwan, Korea and Australia. Now, the company is considering opening locations in China. It has been reluctant to do so since big-box stores like Best Buy and Wal-Mart have found China a difficult market. However, China is projected to be the third largest consumer market in the world by next year (behind the U.S. and Japan) and the potential for growth is now hard to resist. Additionally, Costco now has the advantage of learning from the mistakes of companies that previously entered the market.
Costco Wholesale Corporation (COST) shares ended the week at $113.50, down 2.34% for the week of 3/3.
The Dow started the week of 3/3 at 16,322 and closed at 16,453 on 3/7. The S&P 500 started the week at 1,858 and closed at 1,878. The NASDAQ started the week at 4,261 and closed at 4,336.
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Bonds - Treasuries Fall on Positive Jobs Data
Treasury prices fell and yields rose on Friday, March 7 as the Department of Labor released the results of its latest employment report. The positive report surprised economists who were expecting disappointing results due to the difficult weather being experienced across much of the United States.
The Department of Labor announced the unemployment rate ticked up slightly in February from 6.6% to 6.7%. At the same time, the economy added 175,000 jobs during the month. This compares favorably to the 129,000 jobs added in January and the 84,000 added in December. In addition,79,000 of the jobs added were in professional and business services such as accounting, architecture and technology. The report also showed that average wages increased $0.09 per hour to $24.31 per hour in February. This is the largest monthly wage gain in more than two years.
Secretary of Labor, Tom Perez, commented on the results, "These are well-paying jobs. It's a bellwether of the bullishness of business to expand." The positive report caused Treasury yields to rise. The 10-year Treasury yield rose from 2.73% to 2.78% on Friday during early morning trading. This yield is below the 2014 high of 3.05%, but higher than the 5-year average of 2.7%.
Despite the impressive jobs report, the economy has not entirely recovered from the financial crisis of 2008 and 2009. The U.S. economy lost 8.7 million jobs during the crisis and so far only 8 million have been recovered. Additionally, the underemployment rate is still 12.6%. This rate includes not only people who are unemployed and looking for work, but those that are employed part-time that would like to work full-time and those that want to work but have not looked for a job in the past four weeks.
"The economy has a long way to go, and too many people continue to struggle to get back on their feet," said Secretary Perez. "The challenges confronting the long-term unemployed remain one of the most significant enduring legacies of the Great Recession." The unemployment rate, which is currently at 6.7%, must drop below 5% before the jobs market recovers to pre-recession levels.
The 10-year Treasury note yield finished the week of 3/3 at 2.79% while the 30-year Treasury note yield finished the week at 3.72%.
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CDs and Mortgages - Interest Rates Decline
Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, March 6. The results show mortgage rates falling on the heels of weak economic reports.
The 30-year fixed rate mortgage averaged 4.28% this week. This represents a decrease from last week when the 30-year fixed rate mortgage averaged 4.37%.
This week, the 15-year fixed rate mortgage averaged 3.32%. This represents a decrease from last week when the 15-year fixed rate mortgage averaged 3.39%.
"Mortgage rates were down this week as real GDP was revised downwards to 2.4% growth in the fourth quarter of 2013," said Frank Nothaft, Vice President and Chief Economist at Freddie Mac. "Fixed residential investment negatively contributed to GDP decreasing 8.7% in the fourth quarter. The private sector added an estimated 139,000 jobs in February, which was below the market consensus and followed a downward revision of 48,000 jobs in January, according to the ADP Research Institute."
The money market fund finished the week of 3/3 at 0.4%. The 1-year CD finished at 0.7%.
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Church of the Nazarene Foundation
17001 Prairie Star Parkway, Suite 200
Lenexa, Kansas 66220 United States
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