Currently, individuals over age 70 1/2 can make direct distributions to most public charities from their IRA of up to $100,000 per year. Such a direct distribution avoids the need to include such distributions in income and then seek an offsetting charitable deduction, which complete offset may often not be available.
This direct gift provision is set to expire at the end of 2007. There is a chance that this provision will be extended through 2008. However, President Bush has threatened a veto of the "extender" legislation due to some tax increases that are included in the proposed law (such as taxation of carry interests of hedge fund managers as ordinary income and not capital gain). Therefore, at this point in time, it is hard to say whether the direct to charity rules will survive into next year. Taxpayers who are on the fence about whether to make such transfers in 2007 or 2008 may want to make the transfers in 2007 in case the provision is not extended.