Estates, Gifts & Trusts
Charitable Contributions: Income Tax Aspects (863)
Portfolio Description
Tax Management Portfolio, Charitable Contributions: Income Tax Aspects, No. 863, discusses the income tax deduction for charitable contributions by individuals. Many requirements must be complied with in order to secure a charitable contribution deduction, including an eligible donee, donative intent, and substantiation of the contribution amount. The amount of the deduction is determined by the type of property donated and its fair market value.
To claim a charitable contribution deduction, the property must be donated to an eligible donee. A change in the charitable organization's status can have an effect on the contribution deduction. The issue of donative intent rests principally on the facts of each case. The Portfolio discusses the IRS and court guidelines for determining whether a donor has the requisite charitable intent or if he expects a commensurate benefit in return. The substantiation requirements must be carefully reviewed in connection with donations of property, especially if an appraisal is required.
The Portfolio also analyzes the charitable contribution deduction restrictions. This analysis centers around the provisions of §170(b), (d), and (e), and the regulations thereunder, which detail the applicable limitations on charitable contribution deductions. The factors which determine the percentage limitations include the classification of donee organizations, the type of property donated, and the available carryover provisions. The computation of the percentage limitations is one of the more complex areas of the Code. Contributions are limited to 50%, 30% or 20% of the taxpayer's contribution base, which is defined as adjusted gross income computed without regard to any §172 net operating loss carryback. Due to the complexity of the limitations and the interaction of the various factors, the Portfolio provides numerous examples of the application of the limitations.
Additional aspects of charitable contributions are considered in 839 T.M., Estate and Gift Tax Charitable Deductions; 865 T.M., Charitable Remainder Trusts and Pooled Income Funds; and 866 T.M., Charitable Income Trusts , and in 290 T.M., Charitable Contributions by Corporations, in the U.S Income Series.
This Portfolio may be cited as Kirschten and Freitag, 863 T.M., Charitable Contributions: Income Tax Aspects .
Barbara L. Kirschten, B.A., University of Pennsylvania (summa cum laude); Honours B.A., Cambridge University; Ph.D., M.A., Harvard University; J.D., Northwestern University; member, New York and District of Columbia Bars; member Steering Committee District of Columbia Bar Association Taxation Section and former Chair, Exempt Organizations Committee; Co-Chair, Subcommittee on Museums of Other Cultural Organizations, Exempt Organizations Committee, ABA Section of Taxation; author, The Nonprofit Corporation Forms Handbook; co-author, Federal and State Taxation of Exempt Organizations .
Carla Neeley Freitag, B.A., Duke University (magna cum laude 1974); J.D., University of Florida College of Law (with high honors 1976); LL.M. (in Taxation), University of Miami School of Law (1988); admitted to practice in Florida, Texas, and Georgia; member, American Bar Association, Brevard County Estate Planning Council, Brevard Women Lawyers; author of 539 T.M., Net Operating Losses--Concepts and Computations, 607 T.M., Farm and Ranch Expenses and Credits, 874 T.M., Unrelated Business Income Tax , 875 T.M., Debt-Financed Income (Section 514); co-author of 517 T.M. Scholarships and Educational Expenses ; contributor to Tax Practice Series; Tax Management Distinguished Author.
