Bradley attorney Bruce Ely was quoted in the American Bar Association’s Tax Times on state efforts to enact various workaround measures to avoid or mitigate the effects of new IRS limitations on charitable contributions. Ely noted:
The IRS cast far too wide a net here as evidenced by the fact that their warning shot—Notice 2018-54—said nothing about targeting these scholarship-granting organizations that have been around long before there was even a discussion on a SALT cap. The IRS and certain Treasury officials may view these organizations and the kids they benefit as collateral damage, but I wonder if they’re prepared to help my clients choose which children should lose their scholarships if we witness a substantial drop-off in donations as a result of these over-reaching regulations. These STOs relied on numerous items of IRS guidance, and not just one 2011 CCA, when they made these scholarship commitments—and those commitments usually last until the child graduates from high school or his or her family’s income rises above the poverty level.
The complete article, “States Work to Avoid Impact of TCJA Limitation on State and Local Tax Deduction and IRS Weighs in on Attempted Workarounds,” appeared in the Fall 2018 issue of ABA Tax Times.