In our age, there are two questions that must be answered carefully if we are to be good stewards of the resources Christ has entrusted to us.
-Where should I give?
-How should I give?
In today's world, ministry needs and priorities are highly complex; good stewardship call us to make strategic choices when we give. Our options are also complex. We might ask ourselves:
-Should I give to one organization that supports my ministry priorities?
-Or should I give to my local church, hoping my gift trickles down to the ministry I support?
But there is another choice. If you decide to give through the Church of the Nazarene Foundation, the ministry you care about most is connected to the full support of the church.
For example, if God has given you a vision for feeding hungry children, your gift to Nazarene Child Sponsorship will reach the children you desire to help. And, as importantly, your gift will be supported by:
-Nazarene disaster relief
-Nazarene community development relief
-Nazarene ministry in war-torn nations
And the child you want to help may also be:
-Shown the JESUS film by a Nazarene evangelism team
-Discipled in a Nazarene Sunday School
-Strengthened by a Nazarene healthcare volunteer
-Taught to read using Scripture and Nazarene literature
With many more possibilities abounding for ministry to your sponsored child.
Linked-together ministries allow Jesus to multiply many times over what your gift will provide. And the Church of the Nazarene's strength is a proven track record of linked-together vital ministries that ensure long-term effectiveness.
To learn more, visit our website, www.NazareneFoundation.org. You can also contact us at 913.577.2983 or info@nazarenefoundation.org.
Blessings,
Kenneth R. Roney, J.D.
President
Bill: "Every year I pay income tax. And when I pass away my estate will owe tax. But I was absolutely stunned today to hear that I might even have to pay a gift tax! Do you mean that if I give this land to my children, there is yet another tax?"
CPA Carol: "Yes, Bill, there could be a gift tax. You can make small gifts like birthday gifts without tax. But if you give a large property to your children during your lifetime, there could be a gift tax. And it may be as much as 40% of the value."
Why Did Congress Pass a Gift Tax?
Following the passage of the estate tax, Congress realized that a gift tax is also necessary. If there were no gift tax, creative CPAs and estate attorneys would urge their clients to make deathbed gifts. Rather than waiting until they pass away and paying estate tax, if there were no gift tax the transfer tax could be entirely avoided by making death-bed gifts.
As a result, Congress determined that it needed to pass a gift tax in order to make the estate tax effective. Now, even if a person makes gifts on their death-bed the tax will be payable on the transfer to children.
How Does Gift Tax Work?
A person who makes gifts to children, grandchildren or other heirs will be taxed on the fair market value of the gift. The first part of the gift is allocated to the annual exclusion. But if the gift is more than that amount, then the cumulative gifts over the donor's lifetime are added up and compared with the lifetime gift exemption. If your total gifts (over annual exclusions) during your lifetime exceed the gift exemption, then you must pay gift tax.
What is the Annual Exclusion?
When the gift tax was first created, Congress understood that parents give birthday gifts and other small gifts to children, grandchildren and other heirs. As a result, Congress decided that there would need to be an exclusion for these smaller gifts. The exclusion was $3,000 for many years, then $10,000 and now has increased in value to $14,000. It is adjusted up for inflation about every three years by another $1,000.
How Many Annual Exclusions Can I Use?
First, the annual exclusion must be a present interest gift. This means that the child or other recipient must be able to use the property or spend the money.
Each person is permitted one gift exclusion per recipient per year. For example, a mother could give her daughter $14,000 under the gift exclusion in 2015. A mother and father could give a son and daughter-in-law $56,000, because there are two donors' times two recipients times the $14,000 exclusion.
A grandmother and grandfather with ten grandchildren could make quite large gifts. If each gives $14,000 to the ten grandchildren, then the total gifts under the exclusion amounts would be $280,000 in one year. Assume that they made that same gift every year for ten years, for a total of $2.8 million. If the grandchildren retain and invest the gifts, at the end of ten years the appreciated value could be between $3.5 million and $4.5 million – and all with zero gift tax and no use of their lifetime gift exemption.
How Much is the Lifetime Exemption?
Donors will typically first use their available annual exclusions. However, large gifts such as the ranch that Bill contemplates giving to his children may involve use of the gift exemption. The exemption is $5.43 million per person in 2015. After making use of the $14,000 annual exclusion, Bill and his wife, Helen, can each then give $5.43 million in value ($10.86 million total) to children using their lifetime gift exemption.
While there is no tax cost now for using the exemption, it does affect the estate. In future years, there will be a reduced estate exemption. If Bill uses $1 million of his gift exemption, that reduces the future available estate exemption by $1 million.
Are There Gift Deductions?
Yes, there are potential gift deductions for marital gifts, charitable gifts and gifts for medical expenses and tuition.
There is an unlimited gift exclusion for transfers to a spouse. The gifts could be outright or could be in a qualified terminable interest property (QTIP) trust. This is a special marital deduction trust. The spouse receives all the income from the trust and the trust principal can be invaded only for the benefit of the spouse.
A second deduction is for gifts to charity. The donor receives an income tax deduction, but there is also a gift tax deduction so the donor does not have to pay any gift tax on the transfer to charity. Once again, this deduction is unlimited.
A transfer to charity also may be a qualified split-interest transfer. A donor may create a charitable remainder unitrust, charitable remainder annuity trust or pooled income fund gift. The charitable deduction value qualifies for both the income and the gift tax deduction.
Parents and grandparents on occasion will pay the medical bills of a child or grandchild. These gifts are not subject to the gift tax provided the payment is made directly to the medical institution.
Finally, if a parent or grandparent makes tuition payments for a student, those amounts are also not subject to the gift tax.
Savvy Living
What tips can you offer for tracking down a lost pension from a previous employer?
It's not unusual for a worker to lose track of a pension benefit. Perhaps you left an employer long ago and forgot that you left behind a pension. Maybe you worked for a company that changed owners or went belly up many years ago and you figured the pension went with it.
Today, millions of dollars in benefits are sitting in pension plans across the U.S. or with the Pension Benefit Guaranty Corporation (PBGC), a federal government agency, waiting to be claimed by their rightful owners. The average unclaimed benefit with PBGC is about $6,500.
To help you look for a pension, here are some steps to take and some free resources that can help you search if your previous employer has gone out of business, relocated, changed owners or merged with another firm.
Contact Employer
If you think you have a pension and the company you worked for is still in business, your first step is to call the human resources department and ask how to contact the pension plan administrator. Ask the administrator whether you have a pension, how much it is worth and how to claim it. Depending on how complete the administrator's records are you may need to show proof that you once worked for the company and that you are pension eligible.
Your old income tax returns and W-2 forms from the years you worked at the company will help you here. If you haven't saved your old tax returns from these years, you can get a copy of your earnings record from the Social Security Administration, which will show how much you were paid each calendar year by each employer.
Call 800-772-1213 and ask for Form SSA-7050, "Request for Social Security Earnings Information," or you can download it at ssa.gov/online/ssa-7050.pdf. The SSA charges $136 for this information.
Some other forms that can help you prove pension eligibility are summary plan descriptions and individual benefit statements that you received during your employment.
Search PBGC
If your former employer went out of business or if the company is still in business but terminated itspension plan, check with the PBGC, which guarantees pension payouts to private-sector workers if their pension plans fail, up to annual limits. Most people receive the full benefit they earned before the plan was terminated. The PBGC offers an online pension-search directory tool atsearch.pbgc.gov/mp/mp.aspx.
Get Help
If you need help tracking down your former company because it may have moved, changed owners or merged with another firm, contact the Pension Rights Center. The PRC is a nonprofit consumer organization that offers seven free Pension Counseling and Information Projects around the U.S. serving 30 states. For more information, visit pensionrights.org or call 888-420-6550.
If you, your company or your pension plan are outside the 30-state area served by the PRC or if you're trying to locate a federal or military pension, use Pension Help America (pensionhelp.org). PHA can connect you with government agencies and private organizations that provide free information and assistance to help your search.
For more pension searching tips, see the PBGC's free online publication called "Finding a Lost Pension" atpbgc.gov/documents/finding-a-lost-pension.pdf.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These 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 Living, P.O. Box 5443, Norman, OK 73070.
YOUR PLANCharitable Gift Annuity
God had been so good to Charles and Gladys Prescott, that when it came time to plan for retirement, they wanted to make sure they gave back a portion of God's blessings to Him. Little did they know that God would once again bless them through a Charitable Gift Annuity that provided a return far above what they could earn on a CD.
A Charitable Gift Annuity allowed them to take money that would otherwise bring very little interest in the bank and invest it in God's kingdom while providing a high level of income at the same time. Charles and Gladys receive a regular income at a guaranteed rate for the rest of their lives. A portion of what they receive is tax deductible, and when they established their Charitable Gift Annuity, they received an income tax deduction.
Beyond the security of receiving regular income for life, the Prescott's most appreciate being able to designate how the remaining funds will be used after they go home to Heaven.
Charles and Gladys were so pleased with their first charitable gift annuity, that they have established several more over the years and they have designated several different Nazarene ministries to receive the remaining funds after their death.
Through Charitable Gift Annuities, the Prescott's have planned well for their financial security and income needs. They have established a legacy of faithful stewardship that will continue to bless others, long after their death. They are wonderful examples of what God can do when His faithful servants team up with the Church of the Nazarene Foundation.
Washington News
IRS Employees Who Evade Taxes
The Treasury Inspector General for Tax Administration (TIGTA) published a report on April 14 that showed IRS employees were failing to pay taxes. Over a period of 10 years, there were 1,580 employees who willfully refused to pay taxes.
From this group 620 (39%) were terminated, resigned or retired. The remaining 960 (61%) received penalties. The IRS Commissioner allowed their penalty to be reduced to a suspension, reprimand or counseling.
The IRS officially defended the agency. The IRS responded, “It is important to note that the IRS has a more than 99% tax compliance rate, the highest of any major federal agency.” Under the Restructuring and Reform Act of 1998 (RRA 98), the IRS must terminate employees who willfully refuse to pay taxes. However, the IRS Commissioner may reduce the penalties. TIGTA observed that the IRS Commissioner was not documenting the reasons for the penalty reductions.
As a result of the TIGTA report, the IRS Commissioner agreed that there would be a higher level of documentation. It also acknowledged that the detailed TIGTA review of 34 cases discovered “willful overstatement of expenses, claiming the First-Time Home Buyer Tax Credit without buying a home, and repeated failure to timely file federal tax returns.”
Senate Finance Committee Chairman Orrin Hatch (R-UT) expressed outrage over the serious violations and chastised the IRS for its failure to take action. Hatch stated, “Unfortunately, as today’s report shows, the IRS has often failed to maintain that standard, and has instead allowed employees with serious tax violations to go about their business as usual. Even worse, the agency appears to have rewarded some of them with cash bonuses, promotions and paid time off. This is unacceptable – American taxpayers deserve better.”
House Ways and Means Oversight Sub Committee Chairman Peter Roskam (R-IL) echoed the Hatch concerns. He responded, “The agency acted with impunity, purposefully refusing to fire a majority of employees who violated tax law, including some repeat offenders with other documented misconduct issues.”
FINANCES
A Charitable Gift Annuity allowed them to take money that would otherwise bring very little interest in the bank and invest it in God's kingdom while providing a high level of income at the same time. Charles and Gladys receive a regular income at a guaranteed rate for the rest of their lives. A portion of what they receive is tax deductible, and when they established their Charitable Gift Annuity, they received an income tax deduction.
Beyond the security of receiving regular income for life, the Prescott's most appreciate being able to designate how the remaining funds will be used after they go home to Heaven.
Charles and Gladys were so pleased with their first charitable gift annuity, that they have established several more over the years and they have designated several different Nazarene ministries to receive the remaining funds after their death.
Through Charitable Gift Annuities, the Prescott's have planned well for their financial security and income needs. They have established a legacy of faithful stewardship that will continue to bless others, long after their death. They are wonderful examples of what God can do when His faithful servants team up with the Church of the Nazarene Foundation.
Washington News
The Treasury Inspector General for Tax Administration (TIGTA) published a report on April 14 that showed IRS employees were failing to pay taxes. Over a period of 10 years, there were 1,580 employees who willfully refused to pay taxes.
From this group 620 (39%) were terminated, resigned or retired. The remaining 960 (61%) received penalties. The IRS Commissioner allowed their penalty to be reduced to a suspension, reprimand or counseling.
The IRS officially defended the agency. The IRS responded, “It is important to note that the IRS has a more than 99% tax compliance rate, the highest of any major federal agency.” Under the Restructuring and Reform Act of 1998 (RRA 98), the IRS must terminate employees who willfully refuse to pay taxes. However, the IRS Commissioner may reduce the penalties. TIGTA observed that the IRS Commissioner was not documenting the reasons for the penalty reductions.
As a result of the TIGTA report, the IRS Commissioner agreed that there would be a higher level of documentation. It also acknowledged that the detailed TIGTA review of 34 cases discovered “willful overstatement of expenses, claiming the First-Time Home Buyer Tax Credit without buying a home, and repeated failure to timely file federal tax returns.”
Senate Finance Committee Chairman Orrin Hatch (R-UT) expressed outrage over the serious violations and chastised the IRS for its failure to take action. Hatch stated, “Unfortunately, as today’s report shows, the IRS has often failed to maintain that standard, and has instead allowed employees with serious tax violations to go about their business as usual. Even worse, the agency appears to have rewarded some of them with cash bonuses, promotions and paid time off. This is unacceptable – American taxpayers deserve better.”
House Ways and Means Oversight Sub Committee Chairman Peter Roskam (R-IL) echoed the Hatch concerns. He responded, “The agency acted with impunity, purposefully refusing to fire a majority of employees who violated tax law, including some repeat offenders with other documented misconduct issues.”
FINANCES
Stocks - Kellogg's Profit Plummets
Are you a Nazarene Legacy Partner (NLP)? The answer is “YES” if you have designated any gift to a Nazarene ministry in your will, bequest, or estate plan. This could be a tithe on your estate, an insurance beneficiary designation to your local church, college, global mission, or any other Nazarene ministry you support.
Send us your name and contact information by reply email and indicate “I am a Nazarene Legacy Partner” and we will add your name to our NLP honor roll. To model generosity inspires others to do the same. Thank you for your interest in gift planning. To access any of this updated financial and gift planning information, please select our website.
_____________________________
lobal Church of the Nazarene Foundation
Kellogg Company (K) announced its first quarter results on Tuesday, May 5. The company reported that revenue and earnings fell during the quarter.
Kellogg reported that net sales fell 5% during the quarter to $3.56 billion. Analysts had expected revenue to be $3.55 billion.
"We were pleased to report improved sales trends in the first quarter," said Kellogg's Chairman and CEO John Bryant. "In fact, our results exceeded our expectations and we are on-track for the year. We've made great progress with Project K and are reinvesting to drive profitable sales growth."
The company reported that net income fell 44% to $227 million. During the comparable quarter last year net income was $406 million.
Kellogg's latest quarter reveals that it continues to search for traction with health-conscious consumers. Demand for cereals and other packaged products continues to decline and Kellogg is looking for a way to compete in view of this changing dynamic. In an effort to be more efficient and lean, Kellogg has been implementing a cost-cutting program called Project K. The program calls for Kellogg to close factories and reduce its workforce by 7%.
Kellogg Company (K) shares ended the week at $63.61, relatively unchanged for the week.
3D Systems Experiences Weak Demand
3D Systems Corporation (DDD), designer and producer of 3D printers, announced its first quarter results on Wednesday, May 6. It was a disappointing quarter for 3D Systems with the company experiencing unexpectedly weak demand.
The company reported that revenue during the quarter increased 9% to $160.7 million over the comparable quarter last year. This figure was higher than analyst estimates calling for revenue of $159.3 million.
"We were surprised and disappointed by the abrupt interruption in customer demand late in the quarter from several economic factors that we believe caused many of our customers to defer their planned investments," said 3D Systems President and CEO Avi Reichental. "However, we believe the fundamentals of our business model and the strength of our portfolio are intact, and we are encouraged to see certain OEMs resuming purchasing activities they deferred during the first quarter."
3D Systems recorded a net loss of $13.2 million or $0.12 per share during the quarter. This compared to a gain of $4.9 million during the comparable quarter last year.
Over the past few years the public's awareness of 3D printers has grown, but that increased awareness has not necessarily resulted in increased purchases. 3D Systems is generally seen as the pioneer of 3D printers, but that has not stopped it from reporting disappointing earnings during the past few quarters. The company attributed its disappointing earnings report to unexpectedly weak demand. 3D Systems also announced that it was withdrawing its previously-released financial guidance for 2015 because of growing marketplace uncertainties. Over the past year the company's share price has fallen 51%.
3D Systems Corporation (DDD) shares ended the week at $22.32, down 11% for the week.
Activision Blizzard Reports Earnings
Activision Blizzard (ATVI), a company that develops and publishes computer and video games, announced its first quarter results on Wednesday, May 6. The company reported results that exceeded expectations and it also raised its full-year guidance.
Activision Blizzard reported that revenue during the quarter was $1.28 billion. This is higher than the $1.11 billion reported during the comparable period last year.
"This quarter, we were recognized by FORTUNE as one of the 100 Best Companies to Work For," said Activision Blizzard CEO Bobby Kotick. "Our biggest accomplishment remains our ability to attract and retain so many talented, capable, driven and hard-working people with an unyielding commitment to excellence."
The company reported that net income rose to $394 million or $0.53 per share. During the comparable quarter last year net income was $293 million or $0.40 per share.
Activision Blizzard was able to report better-than-expected results this quarter on the back of growth in its high-margin digital business. The company reported that revenue for its digital business increased 53% during the quarter. Strong sales for games such as Destiny and Call of Duty fueled the growth. Activision Blizzard recently released Hearthstone: Heroes of Warcraft for mobile devices and has plans to release StarCraft II: Legacy of the Void later this year. So far this year the company's share price has risen 15%.
Activision Blizzard (ATVI) shares ended the week at $25.05, up 8.4% for the week.
The Dow started the week of 5/4 at 18,026 and closed at 18,191 on 5/8. The S&P 500 started the week at 2,110 and closed at 2,116. The NASDAQ started the week at 5,018 and closed at 5,004.
Bonds - Treasury Prices Rise on Jobs Report
Treasury prices rose on Friday, May 8 following the release of the latest U.S. jobs report. Investors have been closely monitoring U.S. economic growth for clues as to when the Federal Reserve will begin raising interest rates.
The latest jobs report showed the U.S. economy adding 223,000 jobs during April. This number was in line with expectations, though the March jobs report was revised downward. The unemployment rate fell to 5.4%.
During early Friday trading the 10-year Treasury yield fell to 2.13% after it had closed at 2.18% on Thursday. Treasury prices experienced a corresponding rise as investors flocked to the safety of U.S. bonds.
With the latest jobs report, investors had further confirmation that the Federal Reserve may wait longer to raise the benchmark interest rate than previously expected. The disappointing GDP growth for the fourth quarter of 2014 and the first quarter of 2015 has led investors to believe there is little likelihood of the Fed raising interest rates by its June meeting.
"There is no case the Fed will be tightening any time soon," said Jonathan Lewis, Chief Investment Officer at Samson Capital Advisors LLC. "For investors sitting on cash, today's data is another reminder that the economy is weak, and that yields should not rise much further from here."
The 10-year Treasury note yield finished the week of 5/4 at 2.14% while the 30-year Treasury note yield finished the week at 2.89%.
CDs and Mortgages - Interest Rates Rise
Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, May 7. The results show mortgage rates moving higher this week, a trend that closely followed the rising 10-year Treasury bond yields.
The 30-year fixed rate mortgage averaged 3.80% this week. This was up from last week when it averaged 3.68%.
This week, the 15-year fixed rate mortgage averaged 3.02%. This number was up from last week when it averaged 2.94%.
"Mortgage rates rose this week to the highest level since the week of March 12 as a selloff in German bunds helped drive U.S. Treasury yields above 2.2%," said Len Kiefer, Deputy Chief Economist at Freddie Mac. "The U.S. trade deficit reached $51.4 billion in March to the highest level since 2008. Also, the Institute for Supply Management's manufacturing index was unchanged in April, but manufacturing employment contracted as the index fell below 50 for the first time since May 2013."
The money market fund finished the week of 5/4 at 0.4%. The 1-year CD finished at 0.6%.
____________________________Are you a Nazarene Legacy Partner (NLP)? The answer is “YES” if you have designated any gift to a Nazarene ministry in your will, bequest, or estate plan. This could be a tithe on your estate, an insurance beneficiary designation to your local church, college, global mission, or any other Nazarene ministry you support.
Send us your name and contact information by reply email and indicate “I am a Nazarene Legacy Partner” and we will add your name to our NLP honor roll. To model generosity inspires others to do the same. Thank you for your interest in gift planning. To access any of this updated financial and gift planning information, please select our website.
_____________________________
lobal Church of the Nazarene Foundation
17001 Prairie Star Parkway, Suite 200
Lenexa, Kansas 66220 United States
____________________________
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