Section II: Problems Statement

According to Internal Revenue Service (IRS), a charitable contribution defined as donation or gift
to, or for the use of, a qualified organization. It is voluntary and is made without getting, or expecting to
get, anything of equal value. The reason of charitable contribution made by an entity to qualified
contribution will provide the benefits to the company or individual with tax deduction in the form of
corporate tax and income tax accordance to allowable percentage.
In this case, Elaine who is financial advisor was requested by her clients regarding on tax-related
advisory services from two different financial backgrounds. Anne and William Carson are clients from
upper-middle class while Mack & Jack Bradley are clients from upper class. Each income class has its
own tax benefits and limitations in terms of maximum tax deductions available and tax brackets. Clients
income class plays a big part when it comes to selecting the best charitable vehicle to maximise tax
deduction whether the person high net worth or upper-middle income.
There are some of charitable vehicles available in The United States that Elaine can
recommendations to her clients such as public charities and public foundations, split interest trusts
(Charitable Remainder Trust & Charitable Lead Trust) and charitable vehicles for the upper-middle class
(Pooled Income Funds & Donor-Advised Funds) that can be enjoy by the taxpayers. After considering the
income class, tax implications and what type of charitable vehicles suitable for her clients then Elaine
come with her preferences and the benefits associated with each options available. The calculations will
be made by Elaine to determine the maximum tax deduction available to each her clients.