Wednesday, December 4, 2019


It’s that time of year again – time for the 36TH annual PNC Christmas Price Index!  

The PNC Christmas Price index reports the cost to purchase the gifts included in the classic holiday song “The 12 Days of Christmas”.

PNC tells us it has “ . . . calculated the 2019 price tag for The PNC Christmas Price Index at $38,993.59, a negligible $67.56 or 0.2% more than last year's cost, but less than the government's Consumer Price Index, which increased 1.8% through October in year-over-year measurement before seasonal adjustment.

The major differences in the included items are –

* a 20% drop in the cost of turtle doves, “the first drop in price since 2004”.  

* a 10% increase in the price of 5 gold rings.  After falling in 2018 due to less demand and fluctuations in gold prices, Gold Rings rebounded” in 2019.  

* a 7.7% jump in laying geese “largely due to an increase of interest in backyard farming”.

* a 4.5% drop in the cost of one partridge in a pear tree, resulting from a $10.00 drop in the price of the tree.

Once again, the labor unions for musicians, dancing ladies and leaping lords proves to be better than the milking maid union.  The milkers were paid the minimum wage of $7.25 per hour for 2017 through 2019.  After the individual partridge, costing $20.18, the $58.00 price tag for 8 milking maids was the lowest on the list.  Leaping lords got $1,000 each, slightly more than dancing ladies.  The musicians got a small .8% raise for 2019.  

The chief economist of a bank in Philadelphia, which eventually became part of PNC, began estimating the cost of the 12 Christmas gifts in 1984 as a holiday client letter.  This year’s price is about 95% higher than the first index from 34 years ago.

For those who prefer the convenience of online shopping the Index also calculates the cost of the gifts purchased on the internet.  As online costs are higher due to travel and shipping, the total cost is $42,258.91, $3,265.32 more than “in store” purchases.

The actual true cost of every gift in the song (with each previous day’s purchases repeated over the 12 days) is $170,298.03 in store and $194,502.72 online.

There appears to be some discrepancies in the 2018 numbers reported in this year’s press release and table from PNC and the numbers from the 2018 chart that I had reported in last year’s post.  PNC tells us the 2018 prices were “adjusted to better reflect open market pricing”. 

Click here for the press release that includes the full chart.


Monday, December 2, 2019


A client recently emailed me to ask about charitable giving, specifically if she should use more than her Required Minimum Distribution (RMD) for a Qualified Charitable Distribution (QCD), since one is allowed to make QCDs of up to $100,000 per year, and if it is truly beneficial to donate appreciated securities instead of cash.

To find out just what a QCD is see my 2016 post “Wunnerful Wunnerful”.  Click here to learn more about Donor Advised Funds (DAF).  And I discuss contributing appreciated securities in “A Great Tax Saving Strategy for Charitable Taxpayers”.

In my answer I gave the following example.

You are a resident of the Garden State – New Jersey.  For 2019 you have $17,000 in interest and dividends and $55,000 in capital gains for $72,000 in investment income.  Because of this $22,000 of Social Security is taxed.  You also have a total of $47,000 in RMDs from IRA accounts and $20,000 in RMDs from employer pension accounts, like a 401(k) or 403(b).  So, the total income subject to tax is $161,000.  You make QCDs of the entire $47,000 in IRA RMDs, so AGI is $114,000.  You contribute $34,000 in appreciated stock to a Donor Advised Fund, which reduces taxable income to $80,000.  Additional allowable itemized deductions reduce taxable income further.

By definition, an RMD is required - you need to take the RMD by law – so by basically wiping out your IRA RMD, a $47,000 QCD reduces taxable income.  If you wanted to make a QCD from the IRA of $70,000 your gross income from the IRA would be $70,000, increasing gross income by $23,000, but AGI would remain the same. 

The additional $23,000 QCD did reduce gross income by $23,000 – but it is a “wash” in that the $23,000 needed for the additional QCD increased gross income by $23,000.  While there is technically a “tax benefit” from the additional QCD, it does not reduce your net taxable income.  Your net taxable income after contributions remains $80,000.  

This additional $23,000, while not taxed by Sam, is taxed on the NJ-1040 state income tax return.  And if other NJ gross income was less – say there was not $55,000 in capital gains – so that your NJ gross income was under $100,000 a QCD in excess of the RMD could eliminate any available Retirement Income Exclusion.  Bottom line – using more than your IRA RMD for a QCD increases your NJ state income tax.

Making contributions of appreciated shares of stock or mutual funds instead of cash to a DAF or directly to charities does provide a definite additional tax benefit. 

You want to give $20,000 to a charity or DAF.  If you donate 100 shares of stick with a value of $20,000, but which you paid $10,000 for 5 years ago, you reduce your net taxable income by $20,000.  If instead you sell the shares and give $20,000 in cash to the charity you still have a $20,000 tax deduction, which reduces net taxable income by $20,000, but you have $10,000 in capital gains that increases your gross taxable income by $10,000.  So, the net effect is reducing your net taxable income by only $10,000.  In our example doing this would increase net taxable income after contributions by $10,000 to $90,000 and you would pay an additional $1,500 in federal income tax (capital gain rate of 15%) as well as additional NJ state income tax.

You can sell investments that have gone down in value and would generate a capital loss to generate the cash.  Doing this you can deduct the capital loss from other capital gains and perhaps against up to $3,000 in ordinary income.

One other consideration when donating appreciated securities to a DAF or charity – the current deduction is limited to 30% of AGI.  The deductions of securities in excess of this amount are not “lost” – they are carried forward to future tax years and available for deduction, within the annual calculation of the charitable deduction limitation.  

What does all this mean? 

* Make QCDs only to the extent of annual IRA RMDs, 

* Contribute stock to a DAF or directly to a charity within the 30% of AGI limit (difficult to know the actual final AGI before the end of the year because of year-end dividends and capital gain distributions), and

* Donate the balance via cash from existing sources without selling additional appreciated investments to generate the cash.  

One possible strategy to consider.  The taxpayer in the above example could rollover all the money in employer pension accounts to an IRA account to make 100% of the source of RMDs an IRA account.  So, the $67,000 total RMDs in the example – from both an IRA and pension accounts – would be all from an IRA account and QCDs of the $67,000 would totally wipe-out all RMD income from AGI and, in the example, reduce net taxable income after contributions to $60,000, assuming, of course, the taxpayer would still contribute $34,000 in appreciated securities to charities or a DAF.

I hope this is not too confusing.  Let me know if you have any questions.