Spring 2011

Foreseeing the Future

This past summer, Nina Vance LegacySociety members were invited to anexclusive hard-hat tour of the AlleyTheatre’s renovations with the Alley’sGeneral Manager, Ten EyckSwackhamer. As one of the last privatetours before the September 19 grandreopening, members were given thespecial opportunity to witness thetransformation and glimpse the future ofour remarkable new theatre building.

The tour was followed by a lunch inthe Loya Board Room with special guestartist Hershey Felder, who playedGeorge Gershwin in George GershwinAlone. Mr. Felder, who announced thatthe Alley’s production would be his finalappearance as George Gershwin, sharedhis insights on the creation andperformance of the role and discussedhis projects for the future.

One of the highest honors a donor cangive the Alley Theatre is to include ourtheatre as a beneficiary in an estate plan.The Nina Vance Legacy Society wasestablished to recognize the foresight andgenerosity of these donors. They are not

WHAT’S INSIDE

• IRA CharitableRollover MadePermanent

• A Survey Is Coming

• Tax-Burdened Assets?Turn Them intoCharitable Gifts!

• Free Booklet

Legacy Society members touring theHubbard Theatre in June 2015

Hubbard Theatre in September 2015(continued on back page)

Photo by Kim Coffman

Photo by Mike McCormick

NINA VANCE LEGACY SOCIETY

Alley Theatre’s Financial, Estate and Gift Planning Newsletter Winter 2016

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IRA Charitable Rollover Made Permanent

Since 2006, Congress has extended on an annualbasis the ability of IRA owners ages 70½ and older tomake distributions to qualified organizations of up to$100,000 per year. In late 2015, the ProtectingAmericans from Tax Hikes Act of 2015 was passed,allowing the tax break for IRA charitable transfers tobe made permanent.

Amounts we receive will be free of income taxesand will also avoid future estate taxes. IRA gifts cantake the place of required minimum distributions,reducing your taxable income for 2016. Eligibleindividuals have the opportunity to plan theirqualified charitable distributions for maximum taxadvantages and enable them to see their gifts put touse during their lifetimes.

IRA Gift Rules:

n Donors must be at least age 70½ on the date ofthe gift.

n Transfers may come only from traditional orRoth IRAs, not other qualified retirement accountssuch as 401(k) and 403(b) plans.

n IRA custodians must make the payments directlyto a charity such as the Alley Theatre. If a donorreceives a distribution and makes a gift to the Alley,the full amount will be subject to income tax, althoughthe donor will be entitled to a charitable deduction.

n No charitable deduction is allowed, but donorsavoid the income tax that would otherwise be owedon a withdrawal. Donors benefit even if they do not

itemize their tax deductions.

n Qualified charitable distributions cannot be usedto establish charitable gift annuities or to fund split-interest gifts, such as charitable remainder trusts, butcan be used to satisfy outstanding charitable pledges.

n Transfers can be made only to public charities,not to donor advised funds, private foundations orsupporting organizations.

A Survey Is Coming

In March 2016, the Alley Theatre will conduct adonor survey, which will be sent to you via the e-mail address we have on file for you. The survey is

specifically designed to be easy to answer and quickto complete. We would greatly appreciate yourinput and hope you will find the time to respond.

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Tax-Burdened Assets? Turn Them into Charitable Gifts!

The advantages of leaving IRAs and otherretirement accounts to charities are well known: anestate tax charitable deduction plus the avoidance ofincome taxes (income in respect of a decedent) thatwould be owed by beneficiaries who are not tax-exempt organizations. Income in respect of adecedent (IRD) is income earned by a decedentbefore death but paid to his or her estate after death.This income is includible both in the taxpayer’s grossestate and in the estate’s income.

Retirement account transfers are best made throughbeneficiary designations, but some donors mightwant to consider a broad range of other “tax-burdened” assets that would be good gifts to leave tothe Alley Theatre in a will or living trust:

� U.S. savings bonds cannot be left to charitiesthrough beneficiary designations, but could be givento charity by will or revocable living trust – so long asthe bonds do not have a surviving joint owner ordesignate an individual as beneficiary;

� Accounts receivable of professionals may betaxed at high rates to the estate or to heirs who receivethe funds;

� Renewal commissions are sometimes payable tothe estates of insurance agents and are subject to taxat ordinary income rates;

� Nonqualified deferred compensation, last salarychecks and bonuses often are taxable after death;

� Accrued royalties under a patent license will betaxable at ordinary income tax rates;

� A deceased partner’s distributive share ofpartnership income up to the date of death is taxable,unless left to charity;

� Farmers might consider charitable bequests ofstored grain. In general, the stored crops will betransferred via a warehouse receipt. A charity that

receives a warehouse receipt for crops from an estatecan wait until the market value of the crops is highand then cash in the receipt.

These assets could be the subjects of specificbequests (“I bequeath all my U.S. savings bonds tothe Alley Theatre”) or can have good tax results if they passto one or more charities who are the sole residuarybeneficiaries of the will or trust. A donor can beginby earmarking specific items of “tax-burdened” assetsfor the Alley Theatre or changing the beneficiary of apension plan or IRA to the Alley Theatre. Samplebequest language can be found on our website.

Jeffrey Bean in the Alley Theatre’s production of One Man, Two Guvnors

Photo by John Everett

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Foreseeing the Future (continued from front page)

only creating a personal legacy by supporting anorganization that they care strongly about, but alsoextending a gift to future generations.

Unless otherwise directed, legacy gifts arepermanently invested into the Alley Theatreendowment and a percentage of the earnings is usedto fund the Alley’s general operations, which includeour annual productions and education andcommunity engagement programs. Thus, a plannedgift to the Alley will make a lasting impact.

If you have included the Alley Theatre in your giftplans, please let us know so that we may invite youto join.

If you would like to make a gift for the future of the Alley Theatre, our legal name is Alley Theatre and our Tax ID number is 74-1143076.

Free BookletThe Alley Theatre is offering a FREEpublication on Family Focused Estate Planning.The booklet is a guide to realizing your goals andobjectives in creating your estate plan.Considerations such as an “heir-fair” estate plan,providing for family members with special needs

and even arranging for the care of beloved pets arecovered. It’s a resource that can be read now orkept for the future. The publication is available bymail or e-mail and there is, of course, noobligation. Simply return the enclosed card in theenvelope provided.

Did You Know?The Alley’s inaugural production inits new building in November 1968was Galileo by Bertolt Brecht. In theaudience for a sponsors’ preview were37 American astronauts.

Masthead photos: Jeffrey Bean in Cyrano de Bergerac (photo by Michal Daniel). Jennifer Laporte and John Feltch in To Kill a Mockingbird (photo by T. Charles Erickson).

This publication is prepared exclusively for the information of our friends and donors. Its purpose is to point out current tax developments which may be helpful in your tax and financial planning. This materialis based on recent court decisions and current laws and regulations. You should, of course, consult your own legal, tax or financial planner as to the applicability of any item to your own situation.

Mary Kay WittrockDirector of Planned Giving

615 Texas AvenueHouston, Texas 77002

713.315.3378marykayw@alleytheatre.orgalleytheatre.org/plannedgiving