Glossary of Terms beginning with R

An REIT is a company usually traded publicly that manages a portfolio of real estate to earn profits for shareholders. REITs make investments in a diverse array of real estate such as shopping centers, medical facilities, nursing homes, office buildings, apartment complexes, industrial warehouses, and hotels. Some REITs, called equity REITs, take equity positions in real estate; shareholders receive income from the rents received and from the properties and receive capital gains as buildings are sold for profit. Other REITS specialize in lending money to building developers; such mortgage REITS pass interest income on to shareholders. To avoid taxation at the corporate level, 75% or more of the REIT’s income must be from real property and 90% of its net earnings must be distributed to shareholders annually.

A general term that includes land, improvements on land, various property rights.  

The amount of money received from the sale of property in excess of the original amount paid for the property.

Acronym for Real Estate Investment Trust – REIT is a company usually traded publicly that manages a portfolio of real estate to earn profits for shareholders. REITs make investments in a diverse array of real estate such as shopping centers, medical facilities, nursing homes, office buildings, apartment complexes, industrial warehouses, and hotels. Some REITs, called equity REITs, take equity positions in real estate; shareholders receive income from the rents received and from the properties and receive capital gains as buildings are sold for profit. Other REITS specialize in lending money to building developers; such mortgage REITS pass interest income on to shareholders. To avoid taxation at the corporate level, 75% or more of the REIT’s income must be from real property and 90% of its net earnings must be distributed to shareholders annually.

The benefactor is allowed a deduction for the full fair market value of the TPP only if the item is related to the tax-exempt purposes of the charity. For example: a painting to a museum that would be normally retained by that museum – that is a related use. However, donating a boat to a Midwestern, landlocked college would probably not qualify as a related use and the deduction for the donor would be the fair market value or the cost basis, whichever is LESS.

The amount remaining in a trust after income payments have ended.

The person or institution receiving the assets of a trust upon the death of the beneficiary(ies).

An annual calculation for all who have funds such as IRA's determining how much MUST be taken out of fund each year.

Names a charity as a recipient of ALL or a percentage of the remainder of the estate after specific bequests have been satisfied.

Property left for the final beneficiaries named in a will after all other bequests have been paid.

The accumulated earnings that have not been distributed to shareholders. It is the net income a company earns, less the dividends it pays.  Think of it as unappropriated profit.  

A Closely Held Company may have considerable retained earnings and may be a reason the owner is confused about what to do when it is time to sell.  A charitable gift may be able to mitigate some of the tax liability incurred if no gift were given.

A Retained Life Estate (RLE) is an arrangement in which a donor irrevocably transfers to a charity a remainder interest in a personal residence or farm. As a result, the donor receives an immediate charitable income tax deduction based on the present value of the property at the time of the gift. Having retained a life interest in the property, the donor is free to use or rent the property in accordance with the terms of the agreement between the donor and the charity. The donor generally continues to pay property taxes, insurance premiums, and mortgage payments (assuming the property is not free and clear) with respect to the property. Upon the donor’s death, the charity takes physical possession of the property and, in most cases, liquidates it.

This term sometimes used in place of ‘cost per dollar raised’. In a more global sense ROI has non-monetary objectives such as public awareness (alumni efforts). Most of our organizations do not have the capacity to determine the ROI.

A statement defining the IRS’s position regarding certain tax questions.

A term sometimes used to describe a charitable lead trust in which the remainder interest in the trust reverts to the donor at the end of the lead term. See “Charitable Lead Trust”.

A charitable gift that the donor can take back (will or living trust). Such gifts do not result in immediate tax advantages for their donors.

Synonym of “Living Trust” – A trust in which the person who establishes its benefits from it during his/her lifetime and, in common usage, is revocable by the donor. There are no tax advantages to establishing such a trust – nor is there anything automatically charitable in such a trust

A trust is an arrangement whereby property is held by a trust company or individual for the benefit of others. A revocable trust may be ended by the person creating it.

Planned gifts may be arranged so that the donor retains the right to revoke an income beneficiary’s interest in all future payments by a provision in the donor’s will.

The ownership rights held by an individual whose partner in ownership of property is no longer living. See “Jointly Owned Property”.

Acronym for Retained Life Estate - An arrangement in which a donor irrevocably transfers to a charity a remainder interest in a personal residence or farm. As a result, the donor receives an immediate charitable income tax deduction based on the present value of the property at the time of the gift. Having retained a life interest in the property, the donor is free to use or rent the property in accordance with the terms of the agreement between the donor and the charity. The donor generally continues to pay property taxes, insurance premiums, and mortgage payments (assuming the property is not free and clear) with respect to the property. Upon the donor’s death, the charity takes physical possession of the property and, in most cases, liquidates it.

A type of IRA that is more flexible than a traditional IRA. TAXES are the biggest differentiator between the two types of IRA. A traditional IRA is funded with pre-tax dollars and requires ALL monies drawn from the fund to be taxed at ordinary income rates. A Roth IRA is funded with after tax dollars and ALL monies drawn from the fund are tax free distribtions. Here are some key things to remember about a Roth IRA.

• You cannot deduct contributions to a Roth IRA.
• If you satisfy the requirements, qualified distributions are tax-free.
• You can make contributions to your Roth IRA after you reach age 70 ½.
• You can leave amounts in your Roth IRA as long as you live.
• The account or annuity must be designated as a Roth IRA when it is set up.