The Katrina Emergency Tax Relief Act of 2005 (“KETRA”) provides federal tax benefits designed to benefit taxpayers (individuals and corporations) who have volunteered or made contributions in support of the hurricane relief efforts.
Included among these benefits are the following provisions:

• Individual Cash Contributions: Permitted tax-deductible cash contributions by individuals between August 28, 2005 and December 31, 2005 have been increased from 50% to 100% of an individual’s “contribution base” (generally, an individual’s adjusted gross income). In addition, these contributions will be exempt from the phase-out of itemized deductions for high income taxpayers. Contributions must be to qualified charities, but need not be charities directly involved in disaster relief efforts and the funds do not have to be earmarked solely for disaster relief. Not only does this give individuals the potential for greater or accelerated tax benefits for assisting those affected by Katrina, it also provides the same incentive to those who might contribute to non-relief related charities whose donor base may have been reduced by the diversion of contributions to recent disaster relief entities.

• Corporate Cash Contributions: Permitted tax-deductible cash contributions by corporations between August 28, 2005, and January 1, 2006, have been increased from 10% to 100% of the corporation’s net income, provided the contributions are to a qualified charity AND, unlike the provisions relating to individuals, the contributions must be targeted for relief efforts related to Katrina.

• Mileage Expenses: The charitable mileage deduction rate for taxpayers who use their personal vehicles for Hurricane Katrina relief efforts has been increased from 14 cents per mile to 34 cents per mile for mileage incurred beginning September 1, 2005, through December 31, 2005. Also, reimbursements paid to volunteers for mileage incurred during the same period, up to the business mileage rate of 48.5 cents per mile, is not taxable.

To obtain the benefits of KETRA will require compliance with certain rules, but with proper planning, you may have an opportunity to make a larger tax-deductible cash contribution during the reminder of 2005.

If you have further questions regarding KETRA or one of its provisions, or would like to consult with us about KETRA’s application to you or your business, please call Randall L. Duncan, chair of our Closely Held Business Team, and we will be happy to accommodate your request.

Closely Held
Business Team

The Closely Held Business Team - Dunn Carney is dedicated to assisting business owners in navigating through the opportunities and challenges the law presents to advance each owner’s success in business. They understand the multifaceted issues business owners face each day and the need for responsive and proactive legal counsel.

Team members include:
Randy Duncan, Team leader
Bob Allen
Ric Ashe
David Buono
Brian Cable
Del Clark
Todd Cleek
Jack Cooper
Ken Davis
Frank Hilton
Scott Howard
Scott Jonsson
Robert Kerr
JoDee Keegan
John O'Neil
Eric Smith
Kyle Stinchfield
Bob Winger
J. David Zehntbauer