Glossary of Terms beginning with N

The third type of “Charitable Remainder Unitrust” - Under Code Section 664 (d) (2) and the regulations thereunder, there are three (3) variations of the Unitrust: 1) “Standard” Unitrust – donor irrevocably transfers money, securities or property to a separately invested trust with one or more initial individual beneficiaries and a charitable remainderman. The trust makes payments to the named individual beneficiaries at least annually in the amount equal to a fixed percentage (not less than five percent) of the net fair market value of the trust assets determined once each year. The donor may designate himself and/or other beneficiaries to receive these payments for life so long as the designated beneficiaries are alive at the time the trust is created. Alternatively the trust instrument may provide for unitrust payment to be made for a term of years not to exceed twenty. At the expiration of all income interests the assets are distributed to the charitable organization(s). 2) “Net Income” Unitrust – the same as a “standard” unitrust except the payments to the beneficiary are limited to the lesser of the net income of the trust and the unitrust percentage amount stated in the trust agreement. 3) “Net-Plus-Makeup” Unitrust – Administered as a net income unitrust, except that payments may exceed the state unitrust percentage amount up to, but not exceeding, the amount required to make up any accumulated deficiencies from prior years (years in which the trust’s net income was less than the stated percentage amount).

The 2nd variety of "Charitable Remainder Trust" - Under Code Section 664 (d) (2) and the regulations thereunder, there are three (3) variations of the Unitrust: 1) “Standard” Unitrust – donor irrevocably transfers money, securities or property to a separately invested trust with one or more initial individual beneficiaries and a charitable remainderman. The trust makes payments to the named individual beneficiaries at least annually in the amount equal to a fixed percentage (not less than five percent) of the net fair market value of the trust assets determined once each year. The donor may designate himself and/or other beneficiaries to receive these payments for life so long as the designated beneficiaries are alive at the time the trust is created. Alternatively the trust instrument may provide for unitrust payment to be made for a term of years not to exceed twenty. At the expiration of all income interests the assets are distributed to the charitable organization(s). 2) “Net Income” Unitrust – the same as a “standard” unitrust except the payments to the beneficiary are limited to the lesser of the net income of the trust and the unitrust percentage amount stated in the trust agreement. 3) “Net-Plus-Makeup” Unitrust – Administered as a net income unitrust, except that payments may exceed the state unitrust percentage amount up to, but not exceeding, the amount required to make up any accumulated deficiencies from prior years (years in which the trust’s net income was less than the stated percentage amount).

NUA is the difference between the price you initially paid for stock (cost basis) and its current market value of company owned stock. This is different than normal capital gains. It is typically applicable to company executives.
Example:
Tax rates - income tax 39.6%, capital gains 23.8% (including medicare surtax)
Cost basis - $20,000
NUA - $80,000
NUA % of total market value - 80%
Taxes and penalties using NUA treatment - $28,960
Taxes and penalties without NUA treatment - $49,600

The inferred responsibility of privileged people to act with generosity and nobility to those who are not as privileged.

Virtually anything that is not currency, check or credit card.

Investments that cannot be readily sold or exchanged for cash or cash equivalents, including, but not limited to, real estate, venture capital, leveraged buyouts, and oil and gas interests.

MAY be transferred to your charity, IF the company’s plan permits. Very complex – contact your gift planning office.

Through negotiation or tender offer, a takeover of a majority percentage of a company’s equity with the purpose of acquiring its assets and operations; includes leveraged buyouts (LBO’s).

Generally, property that is not a capital asset.
Examples of noncapital assets: notes receivable acquired in the ordinary course of business, inventory and other property held for sale to customers, depreciable property, copyrights, real property used in trade or business.

Long-term promissory notes that cannot be exchanged for other assets. Generally, these bonds earn interest (coupon rate) paid semiannually and are repaid at the principal (PAR) value.

Acronym for Net Unrealized Appreciation of distributed company stock. A possible tax savings tool for company executives.