from Information on FCF - Monday, January 24, 2005
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"if you need any counsel or help in praying about the best, most tax-efficient way to handle these sorts of issues, we’re here to help in any way we can"
"If you have or will receive an inheritance and would appreciate counsel on how to maximize the amount of funds available for use by your own ministry or other Family ministries or projects, and minimizing the amount you will have to pay in taxes, we have a lot of information and resources available here to help. It would be difficult for us to go into a lot of detail in this general advisory, since there are so many different types of issues that can come up: trusts, stocks, bonds, partial ownership of property or businesses, etc, etc"
Memo > From Family Care Foundation April 2000
God bless you! We love you all very much and are so thankful for everything you are doing to reach out to others with the Lord’s Love!
We recently received a question from some Family members regarding an inheritance they received. From their inheritance, they very generously shared a large portion of the funds with other Family missionaries and activities, God bless them! However, after giving those funds away late last year, this year they found out that due to the nature of the inheritance, they owed back taxes! Their question to FCF was whether we could somehow help with this dilemma, since FCF is a recognized tax-exempt organization.
As you’ll see from their question and our reply (following), we were unable to help in this situation, simply because it was after-the-fact of the gifts being made. Had we been aware of the situation BEFORE the gifts were made, we could have helped to set things up in such a way so as to avoid them having to pay those taxes.
(Excerpt from Family member)
Question: Last year my mother went to be with the Lord. At her death, a trust fund was liberated to us. Well, we gave about 60% of these funds to the Family, with our tithe and other gifts to various translation ministries, mail ministries, VS’s, etc. We also gave a gift to the other couple in our former field, as they also want to go East. Since we do not have home support, the rest of the funds we will be using for our tickets, landing funds, tuition and our home support for the next few years in China, PTL! Isn’t the Lord wonderful?
We saw the trust officer yesterday about the final closing of the trust, and to our total surprise, she gave us a paper that showed that from the funds that we already received, there are $34,007.00 of net capital gains that we need to pay income taxes on! We did not know about these taxes before, as we only briefly met the trust officer once last December when we received the bulk of the funds. We had asked her about the taxes and she had told us that they were already paid. What we did not know was that there are bank taxes and then also personal income taxes, and that we need to pay income tax on it.
We went to see a sweet CPA (accountant) from the H&R block company, and he said we would need to pay taxes of 15% on $34,007, or $5101. (We left the States in 1971 and never again lived in the States. So, this of course in the first time we need to report about income taxes.) The CPA also said that whatever contributions we had made to tax deductible organizations could come off the total that needed to be taxed, in other words, if we could come up with $34,000 in donations that we had made we wouldn’t have to pay any taxes.
Anyway, we just wanted to see if it was a feasible idea to consider trying to avoid some or all of this tax money going to the government by somehow doing some of the accounting of the donations we gave to the MM work and even the other funds that we gave as offerings to the Lit-Pics and WS, through the FCF books? We know that this might not be feasible, or be a lot of work, but we wanted to let you know of the situation and see what you thought might be able to be done. (end of excerpt from question)
(excerpt from our response)
Answer: It must have been quite a shock when the trust officer said that there were capital gains taxes owed from when the funds were still in the trust! Tax law is a very complicated matter and it seems that it’s not unusual at all for these sorts of “nasty little surprises” to come to the fore at sometimes very inopportune times. Unfortunately, because of the fact that the funds were donated last year directly to the various recipients that you gave the funds to and not via FCF, I’m afraid that we wouldn’t to be able to help with the paperwork in order for you to avoid paying those capital gains taxes. The IRS would not consider that the gifts were made to FCF – even though, as it happens, ironically many of the recipients are FCF projects! It would be illegal for us to issue paperwork that would give you credit for making a gift to FCF, when in fact you bypassed FCF and gave directly to several of our projects. Had the gift been made directly to us with instructions from you that a certain amount be given to such and such a project, etc., then last year we would have issued the receipts that your accountant is referring to, and the problem would have never occurred. The same recipients would have received the funds, but by giving directly to FCF, you would have avoided these taxes. However because of the fact that the funds have already been given and did not pass through our books or bank account we can’t go back and retroactively state that you actually donated those funds another way. As much as we would like to see these extra funds go to the Lord’s work, we can’t help at this time because of the legal limitations. (End of excerpt from answer)
In light of the fact that there are probably many more Family members who may find themselves in a somewhat similar situation in the months and years to come, we want to share this information with all, and let you know that if you need any counsel or help in praying about the best, most tax-efficient way to handle these sorts of issues, we’re here to help in any way we can. If you have or will receive an inheritance and would appreciate counsel on how to maximize the amount of funds available for use by your own ministry or other Family ministries or projects, and minimizing the amount you will have to pay in taxes, we have a lot of information and resources available here to help. It would be difficult for us to go into a lot of detail in this general advisory, since there are so many different types of issues that can come up: trusts, stocks, bonds, partial ownership of property or businesses, etc, etc. What would work in one situation might not be the very best in another. But we work with and have access to the counsel of a network of reliable professional tax and financial professionals here in the US, who can help us help you to make sure that the funds the Lord supplies via inheritances, etc, go where YOU feel He is leading, and not to having to pay unnecessary government taxes. We can likewise provide you with System brochures addressing these issues that you might find helpful to pass on to your parents or other aging relatives. (See Newsweek article at end of this advisory)
If you have any questions about this type of situation or any other related matters, please do not hesitate to contact us, regardless of whether you are presently an FCF project or not. You can reach us at:
Family Care Foundation
P.O. Box 1039
Spring Valley, CA 91979
Phone: (619) 468-3191
Much Love and prayers,
Your team at
Family Care Foundation