Business Finance
Choosing a Charitable Vehicle - Lehman Brothers Repo Case Studies Summary

Question Description

Two papers or more of summary for each.

I need you to summarize this cases in two pages or more each (the cover page not included), single space.

Final Answer



Choosing a Charitable Vehicle
Institutional Affiliation




Americans are increasingly donating to charitable organizations and this is seen as being
detrimental to taxation efforts by the government with the government losing around $39 billion
in 2012. This is especially true for wealthy individuals who are more likely to donate their
income with the main benefit being that such contributions offer them charitable tax deductions.
By contributing to charity a citizen’s tax burden is often lowered where such donations could
cause itemized deductions to arise. In the case of death of a taxpayer, their descendants would
profit by lowered taxes of the deceased estate. However, for this to be applicable the charitable
contributions must have been made to institutions qualified as being under 5-01(c) 3 by the IRS.
However, the taxable amount deductible in a given year is limited by limiting individuals
charitable taxable deductions so as not to exceed 50 percent of their Adjusted Gross Income.
This also fluctuates for donations made of capital gain properties or made to private foundations
such that they should not exceed 30 percent of the Adjusted Gross income. Individuals,
therefore, use financial advisors to help them choose charitable vehicles that are beneficial to
them in regards to offering them tax deductions. The types of charitable vehicles are categorized
as either public charities or private foundations with the former being the most popular. These
public charities are often to churches, medical institutions, or educational organizations that are
classified under the 501(c)3.
Elaine White is tasked with giving her two clients the best advice concerning the best
charitable vehicles the two different clients can use. Her first clients are the couple Anne and
William Carson who could be classified as being in the 33% tax bracket. William had just made
$170000 that year though his average salary as a writer was often around $60000. On the other
hand, Anne usually made around $125000 annually as she is an engineer. Elaine knew that the
two clients had different need and also options which were determined by the deductions either



family were to receive for that year, the revenue stream expected for any vehicle White chose,
and also the control that was to be provided to either donor.
Mary and Jack Bradley, on the other hand, had an estate worth $50 million and were
looking to dispose of this estate as they had incurred expenses that had resulted in itemized
deductions of $1.2 million. White concluded that the best vehicle for Anne and William would
be for them to focus on a public charity as their $15000 donation was not ideal for a private
foundation. However White determined that the $3 million being offered by the Bradleys was
more appealing for a private foundation. The family also wanted to ensure that any decision they
made would positively impact their daughter's lives in the case that her cancer came back. For
the Bradleys, a Charitable Remainder Trust was the best option as it guaranteed that their
daughter would have the support of income from the trust while still ensuring that the couple was
actively participating in other ...

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