The Obama Administration yesterday backed down from its plan to tax the earnings on 529 savings accounts, a kind of saving account for higher education under section 529 of the tax code. At Bloomberg, Richard Rubin and...
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NCAA Title Not the Only Victory for Oklahoma State Golf This Year
This past saturday, the Oklahoma State Cowboys mens' golf team secured the NCAA Division I team golf title, winning by three strokes over the second place Florida Gators. But that's not all the Oklahoma State golf team won this past school year. Thanks to the very generous charitable provision inserted in the tax code following Hurricane Katrina that allowed one's charitable contributions to be deducted for up to 100 percent of AGI for any donation, Texas businessman Boone Pickens decided to use the opportunity to make a huge contribution to a charity entitled "O.S.U. Cowboy Golf Inc." The story from CNN Money back on February 24th of this year:
Boone Pickens got a special tax break when he donated $165 million to the sports program at Oklahoma State University, his alma mater, last year, and the school then turned around and invested the money with Pickens' own hedge fund, according to a published report.
The New York Times reported Friday that records show that Pickens' donation spent less than an hour on Dec. 30 in the account of the university's charity, O.S.U. Cowboy Golf Inc., before it was invested in BP Capital Management, a hedge fund controlled by Pickens.
Pickens, whose name graces the school's football stadium, is one of the board members of Cowboy Golf, according to the Times, which said the charity is now being turned into a charity to benefit the school's athletics at large.
The newspaper also reports that Pickens also benefited from a provision in Hurricane Katrina relief legislation that allowed him a deduction for a charitable gifts made in 2005 equal to 100 percent of his adjusted gross income, double the normal limit of 50 percent.
If he does not have that much income in 2005, he can carry the deduction into future years, according to the paper, which added the size of the donation propelled Pickens into the ranks of the nation's top philanthropists last year.
Mike Holder, the university's athletic director, who is also on the board, defended giving Pickens continued control over the donation through the investment with BP Capital.
"If a person's making a gift of that size, he can stipulate what he wants it invested in," Holder told the paper. He said that previous investment of Cowboy Golf assets with Pickens have more than quadrupled in value. (Full Story)
There are many problems with the broad extent to which the charitable deduction can apply to donations throughout the country that many would be skeptical of labeling "charity." That's in addition to the added layers of complexity that come about from legal issues of donations, which includes tax fraud and therefore the need for additional costly fraud enforcement for this issue alone.
For more on the economic problems associated with the charitable deduction, check out this Tax Foundation piece from last November on the topic.
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