Tidbits from the Law – November 2010

November, 2010

The following are items that may be of interest to you:

…When you make a charitable contribution, in order to deduct that contribution, the charity must qualify as a Section 501(c)(3) charity. There was a provision in the Pension Protection Act of 2006 that stated that any exempt organization that does not file a tax return for three consecutive years will automatically lose it tax-exempt status. If that happens, the organization has to reapply. The same law imposed a new requirement to file annual returns for organizations with annual gross revenue of $25,000 or less, which were not required to file annual returns before. This rule does not apply to churches and some church-related organizations. The IRS publishes a list of exempt organizations in danger of losing their tax-exempt status because of not having filed tax returns for three years.

…Many people have their knees repaired, due to injuries or overuse. Recently, the Food and Drug Administration has announced that it will rescind its marketing approval for an orthopedic knee device after a review found that it should never have received FDA clearance. The device was called Menaflex Collagen Scaffold and the FDA required the device manufacturer to meet to discuss what date they had to provide a reasonable assurance of the device’s safety and effectiveness.

…If you have life insurance on your life and get divorced, make sure to have a waiver in your marital settlement agreement and change the beneficiary on the policy. The cases before various courts show mixed results, sometimes awarding the proceeds of the life insurance policy to the ex-spouse and sometimes to the estate of the insured.

…The required withdrawals from IRA accounts are in effect in 2010. Remember if you turned 70-1/2, you must begin withdrawing money by April 1 of the year after you turn 70-1/2. The minimum amount of the distribution is determined by dividing the account balance on December 31st of the previous year by your life expectancy from the IRS tables. You can always withdraw more than that amount. However, if you withdraw less, you will be subject to a 50% excise tax on the amount you should have taken.

…The Illinois Supreme Court recently held that a bank could not foreclose against a property with a deceased borrower unless the bank named a personal representative for the decedent. This could create a cloud on the title of the property that you buy at a foreclosure sale.

…Even after the November elections, there is still no word on change in the federal estate taxes, but there is still a push to make the exemption at least $3.5 million. Some in Congress are pushing for an exemption of $5.0 million, while others are favoring an overall repeal of the federal estate taxes.