Preserve Truth and Freedom for the Future... 
with Effective Gift and Estate Planning Today

The New York Times

• Letter from the President

• Outright vs. Planned Giving

• Bequests

• The Gift Annuity

• Charitable Trusts

• Gifts of Real Estate 

• Gifts of Life Insurance

For questions, or to make a donation over the phone, call Thom Golab at (703) 683-9733 or (800) 672-1423.

A Letter from the President

     Many people are concerned with what they can do to make the world a better place for generations to come.  Liberals are most concerned with how the government can gain more control and more taxes; Conservatives are most concerned with reducing the amount of government, lowering taxes, and upholding the individual freedoms and values on which this country was founded.
     Of course, its no surprise which side the national media support.  From their brazen protection and promotion of Bill Clinton over the eight years he was in office to their attempts to get Al Gore elected as President in 2000 - the liberal media have proven they'll stop at nothing to advance their agenda.  
     Now their campaign is to derail the agenda of George W. Bush, the "selected" President, by their continued efforts to undermine the conservative movement.  

The Movement's Best Defense
     Before the MRC was established in 1987, conservatives had virtually no voice in the so-called "news" media, and virtually nowhere to turn to debunk and neutralize the liberal political agenda in the press.  
     But now, after years of consistent documentation and impeccable research, the MRC has established itself as the movement's most vital tool and resource - the proof conservatives need to combat and counter the liberal media's efforts to bury, distort, or blatantly ignore any news that is unfavorable to their own leftist agenda.  
     And the MRC has lead the charge.  By relentlessly exposing the media's leftist political agenda for all America to see, the MRC has succeeded on two fronts.  First, as numerous surveys document, the public now knows the political agenda of the press.  Second, the public is turning to new alternatives; liberal organizations are losing millions of viewers and readers while new alternatives are flourishing everywhere.  We must be realistic, however.  The left never sleeps, and it will continue its attempts to influence public opinion through the media for generations to come.  
     What can you do to leave the world a better place?  Help ensure that the most vital organization - the Media Research Center - is still flourishing, still on mission, as the "checks and balances" on the liberal press for generations to come.  By including the MRC in your estate plans today, you are making a powerful testament about your desire to preserve the truth and the values that have made this country great.  
     I invite you to call our Office of Gift and Estate Planning to speak with one of our knowledgeable professionals who can help you explore how you can increase your income, reduce taxes, protect your your estate, and create a legacy at the MRC through a variety of gift planning options.  

                                            Sincerely, 

                                         
                                            L. Brent Bozell III
                                            President

Outright vs. Planned Giving

Outright Gifts
     For most people, the easiest and most convenient gift arrangement is an outright gift of cash or long-term property to the Media Research Center.  You, as the donor, would receive a charitable contribution deduction for the full fair market value of the gift. 

Planned Gifts
     Planned gifts, funded with cash or appreciated assets, offer the following benefits to the donor:

• An increased income stream to the donor or selected beneficiaries;

• An immediate charitable contribution deduction;

• The ability to completely bypass or reduce potential capital gains taxes for gifts of appreciated assets;

• A reduction of potential estate and/or gift taxes; and

• The opportunity to establish a lasting legacy at the Media Research Center

Types of Assets Used for Outright and Planned Gifts
     CASH
     Simplicity and ease of delivery make cash the most common type of charitable gift.  The gift is considered made on the date delivered or mailed (by credit card when charged, even though paid later).  Generally, such gifts are deductible to the extent of 50% of your adjusted gross income (income for tax purposes before itemized deductions and personal exemptions); any excess can be deducted over the next five years, subject to the same 50% limitation.  

     PROPERTY
     Appreciated Property.  The deduction for gifts of appreciated property you may have held for more than one year is normally equal to the fair market value of the property donated.  If you have held the property for less than one year, your deduction is limited to your cost basis (what you originally paid for the property).
     These gifts are generally deductible to the extent of 30% of your adjusted gross income.  Any amount not currently deductible because of such a limitation, however, may be carried forward and deducted over the following five years.  

     Depreciated Property.  Conversely, if you are considering a contribution of property which has decreased in value since acquisition, you can only claim a deduction for the property's fair market value.   Thus, you should first sell the property and then donate the proceeds, thereby establishing a loss for tax purposes (available to offset other gains) while entitling you to the same deduction you would receive if you donated the property.

     Appraisal Requirements.  These rules, which affect all significant gifts of property, except publicly traded securities, are discussed in the section covering gifts of real estate.   

Types of Property Gifts
     SECURITIES
     Securities may be given either by transfer of the certificate of ownership or through account transfer arranged with your broker.  In either case, you avoid or reduce the tax on any potential capital gain and receive an immediate charitable deduction.  

     TANGIBLE PERSONAL PROPERTY
     Gifts of equipment, books, gems, artwork, etc., are deductible (within percentage  limitations discussed above) to the extent of full value, as long as the property may be used in the furtherance of the exempt purpose (i.e. grassroots education, media related activities) of the Media Research Center.  Thus, if the use of the donated property is unrelated to the MRC's tax-exempt purpose, such as a coin collection given for resale, the deduction is limited to the donor's cost basis.  If you are the creator of the gift, however, as in the case of a donation of a painting by the artist, the deduction is limited to the cost of the producing asset.  

     REAL ESTATE
     See separate section dealing with gifts of real estate. 

Matching Gifts
     Many employers will match your gift one-for-one or even two-for-one, providing additional support for the Media Research Center.  Often these programs are extended to retirees.  For additional information on matching gifts, contact the employee benefits office at your place of employment.  

Bequests

Creating a Legacy for the Media Research Center
     Including the Media Research Center in your estate plans accomplishes the following worthwhile objectives: 

• It provides a significant legacy that will help provide the resources necessary to enable the MRC to continue its battle against media bias, generate more grassroots action across the country, and to operate its Internet news wire;

• It reduces your estate tax burden by providing a charitable deduction equal to the value of the bequest at the time of your death; and

• It ensures that your assets are distributed in accordance with your wishes

Types of Bequests
     Bequests are provisions made in your Will or Living Trust that specifically set forth the portion or actual dollar amount that you wish transferred to the MRC after death.

     GENERAL BEQUEST
     This is a gift that is payable from the general assets of your estate.  The usual general bequests directs that a certain sum of money be paid to the Media Research Center

     SPECIFIC BEQUEST
     This gives a particular item of real or personal property to the Media Research Center.

     RESIDUARY BEQUEST
     This provides the Media Research Center with the remainder of your estate after all of your debts, expenses, and taxes have been paid and all general and specific bequests satisfied.

     CONTINGENT BEQUEST
     This makes the Media Research Center a beneficiary of your estate only when designated beneficiaries fail to survive you.

     BEQUEST BY CODICIL
     If you already have a Will and you wish to make a bequest to the Media Research Center without rewriting your entire Will, a Codicil can be drawn by your attorney to accomplish this goal.  

     GIFT OF RETIREMENT ASSETS
     Because of the unfavorable tax consequences of giving tax-deferred assets (e.g. 401 (k), 403 (b), SEP, and IRA) to children or other non-spousal individuals, these assets are particularly good candidates for outright charitable giving.  You may simply name the Media Research Center as the beneficiary of this account on the form provided by your retirement account manager.  At your death, your estate will receive an estate tax charitable contribution deduction for the value of the retirement assets donated to the MRC.  

Directing Your Bequest
     Once you have determined the type of bequest you wish to make, you should consider making further provisions that indicate how you want your bequest to be used by the MRC.  There are two categories of bequest designations:

     UNRESTRICTED BEQUESTS
     This form of bequest specifically is intended to support the overall work of the MRC and will be utilized at the discretion of the MRC Board of Directors

     RESTRICTED BEQUESTS
     This form of bequest specifically directs the Media Research Center to use the funds in a particular way for a particular purpose.  This designation can be made to any function or need of the MRC.
     It is recommended that you consult with the MRC staff if you wish to make a restricted bequest to ensure that the specific purpose can be accomplished.
     All of the above examples and suggested language are provided by the Media Research Center for informational purposes only.
     Please consult your legal counsel for more specific information.

The Gift Annuity

     A Charitable Gift Annuity is a combination of a gift and an investment.  In exchange for a gift of $5,000 or more (either in the form of cash or readily marketable securities), you will receive a fixed sum on a regular basis from the Media Research Center throughout your lifetime.  
     The benefits you receive from a gift annuity are substantial:  

• Guaranteed life income -- a portion of which is tax-free;

• Immediate charitable contribution deduction;

• Capital gains tax savings;

• Estate tax savings; and an

• Immediate gift to the MRC of a portion of your gift.

Income Stream
     The annuity payout is based on the age(s) of the annuitant(s), with older donors receiving a higher payout than younger donors.
     Gift annuity rates are established by the American Council on Gift Annuities.  In determining these rates, it is assumed that one-half of the initial contribution will be allocated to the repayment of the annuity and one-half will be treated as a charitable gift.  

Charitable Deduction
     You can claim a charitable contribution deduction in the year of the gift for the portion of the gift's value which exceeds the value of the annuity you receive.  You may also specify how your gift will be used by the Media Research Center.

Cash
     For a gift of cash in exchange for a charitable gift annuity, you would receive a lifetime income stream (based on the stated rates) as well as a charitable contribution deduction.  This income stream would be classified as ordinary income and tax-free return of principal.  If you outlive your actuarially-determined life expectancy, the entire income stream would be taxed as ordinary income.  

Appreciated Securities
     By making gifts of appreciated securities to the annuity program, you can reduce any potential long-term capital gain tax which would be due upon outright sale of the asset.  The total capital gain is split into two parts: gain assignable to the annuity and gain assignable to the gift.  You pay no capital gains tax on the portion assigned to your gift.  The remaining part is spread out over your actuarially-determined life expectancy.  Thus, your income payments are taxed as ordinary, capital gain and tax-free income.  If you outlive your estimated life expectancy, your entire income stream is taxed as ordinary income.  

Security of Payments
    A gift annuity is a contract between you and the Media Research Center and is guaranteed by the MRC's assets.  You need not be concerned about the performance of the stock market or interest rates.  We would be happy to send you a copy of our audited financial statements detailing our assets and liabilities.  

Tax Reporting
     The Media Research Center will furnish you with a worksheet that shows the amount of your charitable income tax deduction and will prepare the necessary IRS Form 1099-R detailing your income payments under this plan.  This form will be sent to you in January of each year.  For property contributions over $500, you will also need to file IRS Form 823.  

Charitable Trusts

     In the mid-1960's, the United States Congress enacted legislation to encourage individual charitable giving.  The result was the Charitable Remainder Trust (CRT).  If an individual is willing to irrevocably commit cash or appreciated assets to the MRC through a CRT, they will receive the following benefits:

• Avoidance of capital gains taxes that would have occurred upon the out-right sale of the appreciated property;

• A current income tax deduction;

• A reduction in estate taxes;

• An increase in current income;

• Preservation of assets for loved ones; and the

• Establishment of a charitable legacy at the MRC

     At the expiration of lives or a select term of years (not to exceed 20), whatever remains in the trust becomes a charitable gift to the MRC.  

Mechanics of a Charitable Remainder Trust (CRT)
      Simply stated, a CRT is an irrevocable, tax-exempt trust divided into income and gift portions.  

     INCOME PORTION
     The CRT will pay a lifetime or term of years (not to exceed 20) income stream to you and/or others at a rate of a at least 5% of the trust value.  In the case of many assets, such as stocks or real estate, the trust will generate substantially more income than as was produced by the asset before the trust was created.  Also, since the CRT is exempt from the capital gains tax, it can sell the appreciated assets without tax liability.

     GIFT PORTION
     The second part of the CRT is the remainder interest that will ultimately pass to the MRC.  This portion, reduced to its present value, constitutes the value of your charitable contribution deduction in the year of the gift.  

Types of Charitable Trusts
     There are two basic types of CRTs that accomplish different objectives: 1) Charitable Remainder Annuity Trust and 2) Charitable Remainder Unitrust:

Charitable Remainder Annuity Trust (CRAT)
     A CRAT pays a fixed percentage (at least 5%) of the INITIAL value of trust assets at least once each year.  The trust payout is constant regardless of fluctuations in trust value or trust earnings.  In an annuity trust, if trust earnings are insufficient to make the required payments in any year, the difference is paid from trust principal.  No additional contributions are permitted under the rules governing CRATs.  

Charitable Remainder Unitrust (CRUT)
     A CRUT pays a selected percentage (at least 5%) of  the ANNUAL value of the trust each year.  The trust payout can vary each year due to fluctuations in trust investment activities and market trends.  If trust earnings in any year are insufficient to pay the selected rate applied to the ANNUAL value of trust assets, the difference is paid from trust principal.  Additional contributions are permitted under the rules governing CRUTs.  

Other Planning Features of CRTs

     EDUCATIONAL AND RETIREMENT PLANNING
     CRTs can be structured to provide initial investment in high growth/low dividend assets and then converted at a targeted later date to higher income investments that produce funds for education or retirement.  Even though the income may be received at some point in the future, the donor receives a charitable contribution deduction in the year the assets are contributed to the trust.  

     FAMILY PLANNING
     A testamentary (effective at death) CRT can be funded with your retirement assets to provide a tax-wise gift for family members and the MRC.

Charitable Lead Trust
     Lead Trust allows you to transfer assets to future generations of family members while allowing the Media Research Center to enjoy the investment income in the meantime.   

     Often described as a "reverse charitable remainder trust," a Charitable Lead Trust often exists for a definite period of time (15-20 years), instead of lives, with assets being returned to family members at the end of the specified period. At the end of this period, the trust assets are given back to you or named beneficiaries. The Lead Trust is typically used with assets that have the potential for significant future income and appreciation. It allows you to leave a significantly larger inheritance to your heirs than would have been possible with a traditional Will or other investment products.

     The income from the assets can be used by the Media Research Center to fund a variety of areas of operation.

Types of Charitable Lead Trusts

1) Grantor Lead Trusts

• Immediate income tax deduction;

• Principal eventually reverts to donor or others;

• Trust income taxable to grantor (donor); and

• Especially attractive for individuals with an extraordinarily high income tax in a particular year or those who can fund the trust with tax-free bonds.

2) Non-Grantor Trust

• The principal must not revert to the donor or his/her spouse;

• Gift tax deduction instead of income tax deduction;

• Trust income taxable to trust instead of the donor;

• Appreciation in value of assets passes to beneficiaries without inclusion in grantor's estate. Asset value is "frozen" on the gift date;

• Especially attractive for one who is interested in shifting income and who wants beneficiaries to receive the property eventually at a reduced estate and gift tax cost to the donor.

Gifts of Real Estate

     You may donate your personal residence, all or part of your vacation residence, commercial property, farm or other real estate either as an outright gift or as part of a life-income plan described in the previous sections. Tax savings and other benefits will vary according to the method you choose, your personal circumstances and the value of the property.

Methods of Giving Real Estate

OUTRIGHT GIFTS
     As always, the simplest form of transferring any property (real or otherwise) is the outright gift. If the property has been held for more than 12 months, you are entitled to a deduction for the full fair market value of the property. In addition, any appreciation in the property will not be taxed as capital gain.

     The value of long-term capital gain property is generally deductible up to 30% of your adjusted gross income in the year of the gift. Any leftover amounts may be carried forward up to five subsequent years, subject to the same 30% limitation.
If the selected property has depreciated in value, it is to your advantage to sell the property, establish your tax loss (which can offset any taxable gains) and then donate the proceeds of sale.

GIFT OF PROPERTY WITH RIGHT TO OCCUPY UNTIL DEATH
(Life Estate Reserved)
     This may consist of a gift of your personal residence, vacation home, yacht, or other property used as a residence (not necessarily your principal residence) or farm (which is any land used by you for production of crops or sustenance of livestock) while retaining the right to live in or otherwise use the property for your life. While you would continue to be responsible for the upkeep, insurance and taxes on the property, you are entitled to a charitable contribution deduction for the present value of your future gift. The amount of this deduction is dependent upon the value of the property and your age at the time of the gift. At your death, the property passes to the Media Research Center and can be sold to fund any designated area of operations.

A BARGAIN-SALE GIFT
     This may be an attractive way to make a gift of property where the value of the property is greater than the amount you wish to give and it is not practical or economical to divide it. The property is sold to the MRC at less than its fair market value. The difference is the amount of your charitable contribution deduction. If the sale/gift is of appreciated property, a portion of the potential gain will be subject to tax. Acceptability of bargain sale gifts from the MRC's point of view depends, of course, on the marketability of the property, the amount of the bargain and the availability of funds to make the purchase.

UNITRUST OPTION
     Highly appreciated real estate is an excellent choice for funding a charitable remainder trust. You would avoid the capital gains tax, receive an income tax deduction and generate an income stream once the property is sold and converted to income-producing investments. Unitrusts are covered in the previous section.

Appraisal Requirements
     Charitable contribution deductions for gifts of property (other than cash or publicly traded securities) with a value in excess of $5,000 must be substantiated by a "qualified appraisal." These requirements are in addition to those generally required to document any deduction claimed for tax purposes, and must be observed in order to support the deduction of such property.

Environmental Review
     In light of current liability concerns, the MRC requires an environmental review for most gifts of real estate.

Gifts of Life Insurance

     For many people, life insurance affords a practical means of making a gift to the Media Research Center. If you name the MRC as the owner and beneficiary of the policy, your charitable deduction will be equal to the cash surrender value of the policy, its replacement value, or its "interpolated terminal reserve" value (a value slightly higher than its cash surrender value), but not in excess of its tax basis (cost). If the policy is not fully paid up, you will be entitled to a charitable contribution deduction for each subsequent premium payment.

     Naming the MRC as the primary or alternate beneficiary of a policy, but not the owner, will not provide a current deduction for either the value of the policy or the premiums paid. However, your estate will be permitted to deduct the amount of the proceeds payable to the MRC for estate tax purposes and you will be able to confer a significant benefit to the MRC at a relatively modest annual cost.
Finally, should you wish to ensure that the proceeds of life insurance be available for the support and maintenance of your surviving spouse before going to the Media Research Center, a variety of trust arrangements can accomplish this objective. These options provide your estate with a deduction for the proceeds paid to the trust without causing the property in the trust to be included in the estate of your spouse.

Wealth Replacement Option
     A common objection to any type of charitable giving is that it deprives family members of the value of the donated asset. This problem can be overcome by coupling a charitable remainder trust (see previous section) with another type of trust utilizing life insurance. 

     In this scenario, you, as the donor, establish a CRT as described on the previous pages. By using the tax savings produced by the charitable deduction or the life income stream generated by this trust, you establish a second trust funded with life insurance (commonly referred to as an irrevocable life insurance trust. At the death of all trust income recipients, whatever remains in the CRT is distributed to the Media Research Center. The life insurance policy in the second trust arrangement is distributed to family members free of gift and estate taxes because of the rules governing this type of trust.

     As a result, the donors receive all the CRT benefits previously described, the children receive the value of the donated asset and the MRC receives a generous gift.

"MRC is the media watchdog we need to learn the truth about national issues." -- Phyllis Schlafly, Eagle Forum

For questions, or to make a donation over the phone, call Thom Golab at (703) 683-9733 or (800) 672-1423.