GiftLegacy eNewsletter Saturday, 22 February 2014 Global Church of the Nazarene Foundation

GiftLegacy eNewsletter Saturday, 22 February 2014 Global Church of the Nazarene Foundation
"For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish but have eternal life".--John 3:16 (NIV)
The Foundation Staff and I wish you a Happy Valentine's Day! We hope that you are able to share Christ's love with family and friends this weekend.
For more information on how to spread the His love by supporting your favorite ministry, please reply to this email or contact us by phone at (913) 577-2983.
Blessings,
Kenneth R. Roney, J.D.
President
PERSONAL PLANNER
Gifts of Cash
Sara: "We had a pretty good year this year. After all the financial changes last year, we decided it was a good time to be more careful. So we watched our budget, took a less expensive vacation, and we actually have substantial savings at the end of this year."
Jane: "Yes. Joe and I were also careful. We have been talking. After setting aside part of our cash savings, we could maybe make some gifts this year. Next Tuesday, we're planning to meet with our tax advisor to discuss some gifts."
Sara: "Harry and I met with our advisor last week to talk about some end-of-year gifts. We plan to make some gifts to the children and also some gifts to charity."
Gifts to Children and Other Heirs
Sara is wise to consider gifts to children or other heirs. In 2014, she and Harry can make gifts of $14,000 each to their children or other beneficiaries using their annual gift exclusions. Sara and Harry decide to make gifts to their two children. Based upon the $14,000 annual exclusion for two donors and two children, they could give $56,000 with no gift tax and no requirement to file a gift tax return.
One good strategy that many parents use is to make a gift of property and to save the cash themselves. For example, if Sara and Harry have some shares of public stock it makes good sense for them to make gifts of their appreciated stock to their children or other heirs. They can then invest the cash themselves and replace the gifted property.
There are two benefits for Sara and Harry if they make the gift of stock. First, the basis in the stock flows through to the children. If the children later sell the stock, they will pay the capital gains tax. However, Harry and Sara have avoided paying the tax themselves and recognition of the gain may be deferred for many years. Sara and Harry can place the cash in their investment fund and replace the stock given to children or other heirs.
Second, it frequently is desirable for children and other heirs to receive property rather than cash. Children tend to spend cash quickly for consumer items. Harry and Sara would like their children to learn to save and invest. A gift of stock is much more likely to lead the children to follow the example of Harry and Sara.
Gifts to Charity
Both Sara and Jane are considering gifts to charity. It is a very good time for them to consider a cash gift. Because they were careful in budgeting this year, both Sara and Jane have a greater opportunity to make a substantial cash gift this year.
Making a cash gift is quite easy. You can simply write a check to your favorite charity. But it is important to make sure that you follow the requirements of the IRS in order to receive your appropriate tax savings for your gift.
Cash Gifts and the IRS
A cash gift saves tax at your top tax rate. For example, if you are in the 33% tax bracket, then a gift of $100 produces a charitable deduction of that amount. Multiplying the $100 times your 33% tax bracket produces an actual tax savings of $33. Of course, in some states you will also save state income taxes.
Your gift by check may be mailed to the charity. If you place the check in the U.S. mail by December 31 of this year and the check clears, it will be deducted in 2014 even though the charity receives the check next year.
If you make a gift of more than $250 to a charity, you must receive what the IRS calls "contemporaneous written acknowledgment" and what you probably refer to as a receipt. The charity will send you a receipt when the gift is made or at the end of the year when you are preparing to file your tax returns. You should keep the receipt or a copy for your records so that you can prove that the gift qualifies for a charitable deduction.
If you make charitable gifts using payroll deductions, you will be permitted to claim the charitable deduction. In that case, you must retain a pay stub or a Form W-2 from your employer that shows the amount given to charity.
You may also spend cash amounts that are deductible as volunteer expenses. In this case, you should make records of each expenditure that shows the services that were rendered to the charity. It also is important to note whether any goods or services have been transferred by the charity back to you.
Charities sometimes make transfers back to donors. A common type of transfer back is a charity dinner. For example, if the charity charges $100 for a dinner event and the value of the dinner is $18, then the charity will send you a receipt that shows a charitable gift of $82. The IRS has a special name for this gift. They call it a "quid pro quo" gift. If the charity is giving something substantial back to you, such as a dinner, the amount of your deduction is just the charitable part of the payment.
Another possible option is for a charity to give you a token gift. If the charity gives a donor a "low value" item that has the logo, colors or identification of the charity on it, it will be disregarded.
For 2014, donors who make gifts of $52 or more may receive items with the name or logo of the charity that are valued at less than $10.40. For donors who make fairly large gifts, the token item may generally have a value up to 2% of the amount of the gift with a limit on the token item value at $104. In the future, those numbers will increase slightly.
Summary
If you have been careful in budgeting this year like Sara and Jane, it may also be a very good time to make an end-of-year cash gift. By following the guidelines that are set forth, you can make sure that you have provided a very nice benefit for a favorite charity and also receive your full charitable deduction on your income taxes.
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SAVVY LIVING
2014 Tax Season Filing Requirements
What are the IRS income tax filing requirements this tax season? My income dropped way down when I retired last year, so I'm wondering if I even need to file a tax return this year.
Whether or not you are required to file a federal income tax return this year depends on your gross income, filing status and age. Your gross income includes all the income you receive that is not exempt from tax. Social Security benefits are exempt up to a certain amount unless you are married and filing separately.
To receive detailed information about federal filing requirements as well as taxable and nontaxable income, call the IRS at 800-829-3676 and ask them to mail you a free copy of the "Tax Guide for Seniors" (publication 554) or see irs.gov/pub/irs-pdf/p554.pdf.
To assist you, here are the basic IRS filing requirements for this tax season. If your gross income for tax year 2013 was lower than the amount listed in your filing status, you probably won't have to file a tax return. But if your gross income is over the amount listed, then it is likely you will have to file a return.
Single: $10,000 ($11,500 if you're 65 or older by Dec. 31, 2013).
Married Filing Jointly: $20,000 ($21,200 if you or your spouse is 65 or older; or $22,400 if you're both over 65).
Married Filing Separately: $3,900 at any age.
Head of Household: $12,850 ($14,350 if age 65 or older).
Qualifying Widow(er) With Dependent Child: $16,100 ($17,300 if age 65 or older).
Special Requirements
There are some special financial situations that require you to file a tax return even if your gross income falls below the IRS filing threshold. For example, if you had net earnings from self-employment in 2013 of $400 or more or if you owe any special taxes to the IRS such as alternative minimum tax or IRA tax penalties, then you will probably need to file.
The IRS offers a helpful resource on their website called "Do I Need to File a Tax Return?" that will help you to determine if you are required to file or if you should file because you are due a refund. You can access this page at www.irs.gov/uac/Do-I-Need-to-File-a-Tax-Return%3F or you can call the IRS helpline at 800-829-1040. You can also get face-to-face help at a Taxpayer Assistance Center. See irs.gov/localcontacts or call 800-829-1040 to locate a center near you.
Check Your State
The fact that you are not required to file a federal tax return this year does not necessarily mean you are also excused from filing a state income tax return. Check with your state tax agency before concluding that you will not file a state tax return. For links to state and local tax agencies see taxadmin.org and click on "State Agencies/Links."
Tax Prep Assistance
If you find that you do need to file a federal tax return this year, you can get help through the Tax Counseling for the Elderly (TCE) program. Sponsored by the IRS, TCE provides free tax preparation and counseling services to middle and low-income taxpayers age 60 and older. Call 800-906-9887 to locate a service near you.
Also check with AARP, a participant in the TCE program, that provides free tax preparation at more than 5,000 sites nationwide. To locate an AARP Tax-Aide site call 888-227-7669 or visit aarp.org/findtaxhelp. You don't have to be an AARP member to use this service.
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
A God-Honoring Estate Plan
Like so many others, my wife and I found ourselves without a current and viable estate plan in place. Although we had drawn up a pair of wills years before, it was a shock to see how out-dated and inadequate they had become. Our circumstances, finances, and interests had changed; but our wills had not. A last will and testament is supposed to provide instructions to family and friends about who and what was important to the will-maker in life. With time, our estate plan no longer reflected those values. And to just discard our old wills would leave us without a viable estate plan, causing state laws to take over and leaving our assets to be distributed to distant or unintended relatives, or possibly to the state itself. Neither result was what we wanted to leave behind.
So began our journey to develop a God-honoring estate plan that would include our family and the local church, as well as national and international ministries, after we are gone.
In 1985, my wife and I purchased a small family business from my parents. Over the years, the Lord blessed our hard work and commitment to quality products and services. After operating the business for a number of years, we began to realize that we had many employees who depended on us as well as a great deal of corporate responsibilities. It became obvious we needed an estate plan that would deal with the business issues as well as our personal goals. 
About that time, we were invited to our first World Challenge in Tacoma, Washington. The effectiveness of the JESUS Film was very impressive. We appreciated how the JESUS Film Harvest Partners teams work with indigenous peoples to identify pastoral and lay leadership, and how they help establish preaching points and organize local churches to disciple new believers. As a result of that invitation to the Tacoma World Challenge, we included the JESUS Film Harvest Partners ministry in our new estate plan.
Some time later, in a more recent World Challenge, my wife and I were struck with the urgency of getting JESUS Film teams and equipment out to the field. We realized we didn't want to wait until we were dead and gone to support this ministry in a more meaningful way. We wanted to be a part of the ministry during our lifetime. So, we decided to make an immediate and significant pledge.
In order to implement this pledge, we engaged the services of the Foundation. With their help, we were able to establish an endowment fund, which will be funded over a five-year period. Each year, 95 percent of the endowment earnings will go the JESUS Film Harvest Partners ministry and the remaining 5 percent will be plowed back into the endowment to help grow the fund.
After we are gone, our estate will be distributed to various ministries through the Foundation in a God-honoring way. We are so impressed with the Foundation and thankful that we can have the joy of giving now and seeing the results because of our endowments. We are confident the ministries that are important to us will keep on receiving income in perpetuity. 
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WASHINGTON NEWS
IRS Top Tax Scams
Each year the IRS publishes the "Dirty Dozen" tax scams. A February 19 letter from IRS Commissioner John Koskinen listed multiple potential scams that could victimize American taxpayers.
Koskinen noted, "Taxpayers should be on the lookout for tax scams using the IRS name. These schemes jump every year at tax time. Scams can be sophisticated and take many different forms. We urge people to protect themselves and use caution when viewing emails, receiving telephone calls or getting advice on tax issues."
The top five tax scams this year are identity theft, phone fraud, fake websites, "free money" refunds and unscrupulous tax preparers.
1. Identity Theft – The identity thief typically acquires your name and Social Security number and is an early filer. He or she attempts to file a tax return with your identity and obtain a large refund. The IRS reported a 70% increase in identity theft tax fraud investigations in 2013. It has substantially increased its efforts to address potential identity theft and tax fraud. If you believe you have been a victim of identity theft, call the IRS Identity Protection Specialized Unit at 800-908-4490. There also is information on identity theft on www.irs.gov.
2. Phone Fraud – There are scam phone callers who claim to be from the IRS or state government. Typically, they will use common names and claim that you owe taxes. If you do not immediately pay taxes to them, they threaten to revoke your driver's license or take other action. Frequently, the first person hangs up and within five minutes a second caller claims to be a police officer or from the Department of Motor Vehicles. He or she confirms the first message and demands payment. The IRS has a protection line at 1-800-829-1040. If you think you have been called by a fraudulent person claiming to be from the government, you also can use the FTC Complaint Assistant at FTC.gov.
3. Fake Email or Website – Phishing is the computer term for sending a fake email with a link to what claims to be a government website. The goal of the sender is to persuade the person to click on the link and then enter personal information. Using a Social Security Number or banking information, the sender then can commit identity theft or financial theft. Taxpayers need to understand that the IRS will not contact them by email. Unsolicited email is not from the IRS. Anyone who receives a "phishing" email should forward it to phishing@irs.gov.
4. "Free Money" Refunds – Some scammers will use fliers, ads, store fronts and word of mouth to claim that everyone can receive large refunds. Many scammers have used informal networks such as community groups or church groups to promote their service. They claim that everyone should receive a substantial "free money" tax refund. The scammers prepare tax returns with inflated deductions and improper credits. The victims pay a substantial fee and file the return to claim their large refund. Unfortunately, IRS income levels affect distribution of various Social Security, veterans, low-income housing and other government benefits. As a result, some individuals have experienced an interruption in their other government payments because they improperly reported their income. Taxpayers should be on guard for preparers who charge a large fee and do not provide a copy of the tax return.
5. Unscrupulous Tax Preparer – Most tax preparers are honest persons. However, some regularly commit refund fraud. They either do not report the correct income or claim improper deductions or credits. The tax preparer is required to include the IRS Preparer Tax Identification Number (PTIN) on the return. If the tax preparer is improper or abusive, the taxpayer should file IRS Form 14157, Complaint: Tax Return Preparer. This may be downloaded on irs.gov.
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FINANCES
Stocks - Coca-Cola Reports Disappointing Earnings
The Coca-Cola Company (KO), the world's largest beverage company based on market value, reported its latest quarterly results on Tuesday, February 18. The company reported lower revenue and net income compared to last year.
The company reported quarterly revenue of $11.04 billion. This represents a decrease of 4% from the same period last year when the company reported revenue of $11.46 billion.
Coca-Cola reported net income of $1.71 billion, or $0.38 per share, for the quarter. This also represents a decrease from the comparable period last year when the company reported net income of $1.87 billion or $0.41 per share.
Muhtar Kent, Chairman and CEO of Coca-Cola, commented on the company's future. "As we work to restore momentum in our business during 2014, we see many reasons to believe we can accelerate our growth and achieve our 2020 Vision. We are committed to accelerating marketing investments in our brands, further advancing our innovation strategies and maximizing productivity and reinvestment for growth. All of us at The Coca-Cola Company remain resolute in our commitment to deliver results in line with our long-term growth model and 2020 Vision for sustainable value and success."
The board of directors and management team at Coca-Cola is currently in flux. It was just announced on Thursday, February 20 that three individuals would be leaving the company after serving the company for a combined total of 59 years. Board member Donald McHenry, board member Jacob Wallenberg and CFO Gary Fayard are all leaving the company. Kathy Waller will succeed Gary Fayard as CFO of The Coca-Cola Company.
The Coca-Cola Company (KO) shares ended the week of 02/17 at $37.19, down 2.1% for the week.
Wal-Mart Stays Consistent
Wal-Mart Stores, Inc. (WMT), the world's largest company based on sales, reported its fourth quarter and 2013 fiscal year results on Thursday, February 20. The company's sales and net income remained relatively stable compared to a year ago.
Wal-Mart reported quarterly and annual revenue of $128.79 billion and $476.29 billion, respectively. This represents a slight increase from the same periods last year when the company reported quarterly and annual revenues of $127.78 billion and 468.65 billion.
The company reported net income of $4.35 billion for the quarter and $15.92 billion for the year. This represents a decrease from the comparable periods last year when the company reported quarterly net income of $5.6 billion and annual net income of $16.96 billion.
"Our company grew net sales this year to reach more than $473 billion," said Doug McMillon, Wal-Mart Stores President and CEO. "Global eCommerce sales, including acquisitions, surpassed the $10 billion mark, a 30% increase over last year. We will continue to grow our global business by focusing on customers and serving them how they want to be served."
Wal-Mart is making a push to improve its market share in China. The company currently ranks as the country's third largest retailer. To improve sales Wal-Mart is changing its low-cost strategy to focus more on quality and safety. "If you went out and asked members or customers, 'what's your single biggest worry?' they'll tell you trust and authenticity," said Greg Foran, Wal-Mart China CEO. "Once you've got their trust, the next question they ask themselves is, 'How much is it?'"
Wal-Mart Stores, Inc. (WMT) shares ended the week of 2/17 at $72.12, down 3.14% for the week.
Tesla Charges Forward
Tesla Motors, Inc. (TSLA), an electric car company based in Silicon Valley, reported its fourth quarter and 2013 fiscal year results on Wednesday, February 19. The car company reported impressive revenue, but investors are skeptical regarding the car maker's future success.
Tesla reported revenue of $615.22 million for the quarter and $2.01 billion for the year. This represents a significant increase over the same periods last year when the company reported total revenue of $306.33 million for the quarter and $413.26 million for the year.
The company reported a quarterly net loss of $16.26 million and an annual net loss of $74.01 million. This represents a significant improvement from last year when the company reported a quarterly net loss of $89.93 million and an annual net loss of $396.21 million.
"Last quarter, we had record deliveries of 6,892 vehicles and exceeded our target automotive gross margin of 25%," said Elon Musk, Chairman and CEO of Tesla, in a letter to shareholders. "This capped a year in which we delivered 22,477 vehicles, resulting in over $2 billion in sales on a GAAP basis. For the year, Model S was the top selling vehicle in North America among comparably priced cars. Nonetheless, we believe there is room to improve in 2014 as we complete the Supercharger network and enable vehicle service almost anywhere in North America."
Despite reporting impressive revenue, investors are skeptical that Tesla can deliver solid results moving forward. One of the primary indicators that Tesla may be facing trouble is that U.S. deliveries of the Model S are falling. While Tesla delivered 5,150 vehicles in the U.S. during the second quarter of 2013, the company lowered its guidance to around 3,500 U.S. deliveries in the first quarter of 2014. At the same time, the guidance for European deliveries remains flat at 2,900 vehicles. Combine this with the fact that Tesla continues to report net losses and many investors are beginning to wonder whether the company can justify its current stock price.
Tesla Motors, Inc. (TSLA) shares ended the week of 2/17 at $209.60, up 2.12% for the week.
The Dow started the week of 2/17 at 16,154 and closed at 16,103 on 2/21. The S&P 500 started the week at 1,839 and closed at 1,836. The NASDAQ started the week at 4,254 and closed at 4,263.
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Bonds - Treasury Yields Fall Slightly
Bond prices rose and yields fell on Friday, February 21 after the release of economic data and minutes from the latest Federal Open Market Committee meeting. The 10-year U.S. Treasury yield fell from 2.78% to 2.76% in early Friday morning trading.
The National Association of Realtors released a report on Friday, February 21 showing that sales of previously owned U.S. homes fell to the lowest level in more than a year. Home purchases decreased 5.1% to a 4.62 million annual rate last month. This was 50,000 below the consensus forecast of 4.67 million.
Many analysts are wondering about the reason for the drop in home sales. Thomas Roth, Senior Treasury Trader at Mitsubishi UFJ Securities USA, Inc., commented on the National Association of Realtors report. "The market is trying to figure out where we are – the question still remains – was this a weather-induced slowdown or something more?" Christopher Sullivan, Chief Investment Officer at United Nations Federal Credit Union added, "The market could quite easily recalibrate itself to a better fundamental picture once we see data no longer distorted by unusual weather conditions."
In addition, many are interpreting the minutes of the latest Federal Reserve meeting to indicate that the Fed will continue to decrease its bond purchases. The minutes also indicate that a few officials believe that it might be appropriate to increase the federal funds rate relatively soon. This would have wide-reaching effects on the economy.
The full effect of inclement weather and changes in Fed policy likely will be unknown for many months. For now, investors must do their best to anticipate the impact of these events on the market.
The 10-year Treasury note yield finished the week of 2/17 at 2.73% while the 30-year Treasury note yield finished the week at 3.7%.
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CDs and Mortgages - Interest Rates Inch Higher
Freddie Mac released the results of its weekly Primary Mortgage Market Survey (PMMS) on Thursday, February 20, 2014. The results show average fixed mortgage rates increasing for the second consecutive week.
The 30-year fixed rate mortgage averaged 4.33% this week. This is an increase from last week when it averaged 4.28%. One year ago at this time, the 30-year fixed rate mortgage averaged 3.56%.
This week, the 15-year fixed rate mortgage averaged 3.35%. This represents an increase from last week when it averaged 3.33%. Last year at this time, the 15-year fixed rate mortgage averaged 2.77%.
Frank Nothaft, Vice President and Chief Economist at Freddie Mac, commented on this week's survey results. "Mortgage rates crept up further following the uptick in the 10-year Treasury yield as minutes of the Federal Reserve's last meeting indicated little possibility of a pause in the central bank's reduction of bond purchases. Housing starts in January fell 16% to a seasonally adjusted annual rate of 888,000 units, below consensus forecast. Permits were at a seasonally adjusted annual rate of 937,000 in January, also below consensus."
The money market fund finished the week of 2/17 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, KS 66220 United States
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