What You Should Know About Outright Gifts to Charity

DISCLAIMER: The following is a brief, perhaps over-simplistic, overview of some of the more frequently asked questions concerning outright contributions to charities. This memorandum should not be relied upon in any given situation without first consulting your tax advisor. The law in this area changes frequently, and I have not necessarily undertaken to keep this memo current, since that would be a full-time job.

What Are The Primary Income Tax Advantages in Making a Gift to Charity?	The primary advantage is that the donor is entitled to an income tax deduction, within limits, for the full fair market value of certain property given to charity. (The limits —which will be discussed below— depend on a number of reticulated factors that are difficult to absorb at once.)
Are There Any Transfer Taxes Incurred When a Donor Makes a Gift to Charity?	Not usually. The donor will ordinarily be entitled to a gift or estate tax deduction in the case of an outright gift to charity or for charitable use. If the gift is restricted, or is a split-interest gift — with both charitable and noncharitable beneficiaries —, the rules are much more involved and much less straight forward, and a transfer deduction in such cases may only be available in part, or not at all, depending upon the facts and the form of transfer. Unlike an income tax deduction, which can be a positive benefit to the donor, it cannot really be said that the transfer tax deduction is an advantage. The better view is that the transfer tax deduction keeps the transferor from being penalized.
Will the Donor Recognize Gain or Loss on the Contribution of Property To Charity?	Frequently not. One of the primary advantages of making a gift to charity (including a gift to a Private Foundation) is that, within the limits discussed below, the donor generally does not recognize gain on the transfer of property to charity (and yet may be entitled to a deduction against income for the full value of the property). On the other hand, if the property were sold at its fair market value, in excess of basis, capital gains would be recognized, and the deduction for a contribution of the net after tax proceeds would be limited to the net after tax amount. This is one of the most important factors encouraging charitable gifts. The same rule applies to gifts to certain split-interest trusts, such as charitable remainder trusts (CRTs), and is, perhaps, the primary reason for the popularity of CRTs. There are limitations discussed below, that determine the extent to which the foregoing advantages may be realized.
What Types of Organizations Qualify For the Income, Estate and Gift Tax Deductions?	For the most part, a limited income tax deduction, and an unlimited estate and gift tax deduction, is available for gifts of property to charitable, educational and religious organizations described in IRC^[1] §501(c)(3), or, in some cases, for gifts made to certain “semi-public” charities (described below).
What is a 501(c)(3) organization?	A 501(c)(3) organization is an charitable organization exempt from income tax that is described in the IRC as follows: Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.^[2]
What Are the Primary Limits on the Size of the Income Tax Deduction That Can Be Taken For a Gift to Charity?	The primary limitations on the size of the income tax deduction available to a donor for a gift to charity are often referred to as the “percentage limitations.” Under IRC §170(b), an individual donor may take a charitable income tax deduction in any one year of an amount that may not exceed either 20%, 30% or 50% of the donor’s “contribution base.” Whether the 20%, 30% or 50% limit applies depends upon the nature of the donee charity. 50% charities are described in IRC §170(b)(1)(A), and are discussed later on in this memo in some detail. The deduction allowed an individual donor who makes a contribution to a “50% charity” is limited to 50% of the donor’s contribution base. 30% charities are charitable organizations that are not “50% charities.” The deduction allowed an individual donor who makes a contribution to a “30% charity” is limited to 30% of the donor’s contribution base.
	IRC §170(b)(1)(B) similarly limits a contribution “for the use of” a charitable organization to 30% of the donor’s contribution base. A limitation of 20% or 30% of the donor’s contribution base also applies to certain contributions of capital gains property to charity.^[3] Special carryover rules apply to contributions made in excess of the percentage limitations.^[4] Each of these rules will be discussed again, later on in this memo.
What Does the Term Contribution Base Mean?	IRC §170(b)(1)(F) defines “contribution base” as “adjusted gross income (computed without regard to any net operating loss carryback to the taxable year under section 172).” Adjusted gross income (herein sometimes abbreviated to AGI) is defined by IRC §62 as “gross income” less certain listed deductions. “Gross income,” in turn, is defined by IRC §61 as “all income from whatever source derived.” (Tens of thousands of tax cases have now interpreted this phrase in a myriad of contexts.)
Are There Any Limitations Under IRC §68 on the Income Tax Charitable Deduction?	Yes. IRC §68 may operate to reduce your otherwise allowable itemized deductions by either 3% of your adjusted gross income or 80% of your otherwise allowable itemized deductions, whichever is less. IRC §68 applies to taxpayers who have adjusted gross income (AGI) for the taxable year in excess of the “applicable amount.” The applicable amount “means $100,000 ($50,000 in the case of a separate return by a married individual.”^[5] The applicable amount is adjusted for inflation, beginning in 1992. (The applicable amount was $132,950 in 2001, or $66,475 in 2001 for married individuals filing separately.)
Are There Any Overall Limits On Itemized Deductions For Gifts to Charity?	Yes. IRC §67(a) provides a 2% floor on miscellaneous itemized deductions. Under this rule, you can only deduct certain miscellaneous itemized deductions to the extent that the aggregate of such deductions exceeds 2% of adjusted gross income (AGI). Charitable contributions are itemized deductions, and as such, are subject to this limitation.
Are the 2% Floor and the 3% Reduction Rules of Practical significance?	Usually not. In most cases, the 2% floor and the 3% reduction will be reached by reference to mortgage interest and local taxes alone, without regard to the charitable contribution.
Are There Any Tax Differences That Will Apply to a Donor, That Depend Upon the Type of 501(c)(3) Organization That Receives the Donor’s Charitable Donation?	The nature and extent of a donor’s income tax deduction, and the extent to which the donor may avoid recognizing gain on the transfer of appreciated property to charity depend upon a number of factors, including the amount of the donor’s adjusted gross income in the year of the contribution and in carryover years, and whether or not the charity is a 50% charity, a public charity, or an operating or nonoperating private foundation. These categories will be discussed below.
What is a Public Charity?	The term “public charity” means an organization described in IRC §170(b)(1)(A)(i)-(vi).^[6] §170(b)(1)(A)(i)-(vi), quoted in full in the footnote, describes churches, schools, hospitals, governmental entities, community chests, and certain organizations which normally receive a substantial part of its support from the general public. A simpler way of defining the term is to say that a public charity is any 501(c)(3) organization that is not a Private Foundation or a semi-public charity.
What is a Semi-Public Charity?	A “semi-public” charity is an organization that is not described in IRC §170(b)(1)(A) and that is not a private foundation. A list of semi-public charities would include organizations described in IRC §170(c)(3)-(4), to wit: certain posts or organizations of war veterans, certain domestic fraternal society, order, or association, operating under the lodge system, and cemetery companies owned and operated exclusively for the benefit of its members.
What Is A Private Foundation?	Churches, schools, governmental units, hospitals and certain broadly supported public charities are generally excluded from the definition of Private Foundation; but, with a few exceptions (most notably for churches), a charity — no matter what its true nature — will be treated as a Private Foundation unless it notifies the IRS that it is not.
Are There Any Other Organizations that Are Treated as if they Were Private Foundations?	Yes. Certain charitable trusts that are not exempt under §501(c)(3), but which have no noncharitable beneficiaries and for which a charitable deduction was allowed, are treated as Private Foundations.^[7] Also certain split-interest trusts having both charitable and noncharitable beneficiaries are treated as if they were Private Foundations for many purposes.^[8]

What are the Principal Disadvantages of Being Classified as a Private Foundation?	• Private foundations are subject to a 2% tax on net investment income.^[9] • Private foundations are subject to a number of complicated rules that prohibit and tax various forms of self dealing.^[10] • Private foundations are subject to minimum income distribution requirements.^[11] • Private foundations are subject to rules restricting “excess business holdings.”^[12] • Private foundations are subject to rules prohibiting certain “jeopardy” or high risk investments.^[13]
	• Private foundations are subject to certain limitations on the expenditure of foundation funds.^[14] • Private foundations are subject to a tax when the Private Foundation status terminates.^[15] • The deductions for contributions to nonoperating Private Foundations are limited to 30% of the taxpayer’s contribution base, instead of 50%.^[16] • The reporting requirements for Private Foundations are more onerous than in the case of a public charity.^[17]
	• Private foundations are subject to a number of “governing instrument requirements, not applicable to public charities.^[18] Basically, the governing instruments (articles and bylaws) of a Private Foundation must prohibit the organization from engaging in the types of activities, described above, that would generate an excise tax. • Private foundations that make grants to other Private Foundations not controlled by the granting foundation are not allowed a qualifying distribution deduction in computing the foundation's undistributed income unless the grant is redistributed by the recipient of the grant.^[19]. • Grants from a Private Foundation to another Private Foundation are required to exercise of “expenditure responsibility” in order to avoid the tax on taxable expenditures.^[20]
Are There any Advantages to Being Classified as a Private Operating Foundation?	Yes. • Private operating foundations are exempt from the minimum distribution requirements.^[21] • The deductions for contributions to operating Private Foundations are deductible up to 50% of the taxpayer’s contribution base, as in the case of a public charity.^[22] • “Exempt” private operating foundations are not liable for the tax on net investment income.^[23]
What is a Private Operating Foundation?	An operating foundation is a special hybrid type of private foundation that receives special tax treatment not available to other nonoperating private foundations. Operating foundations typically use their assets and income directly in the active conduct and furtherance of the foundation’s charitable operations, rather than for the purpose of making grants to other charities. To be classified as a private operating foundation, the organization must first meet an “income test,” and next must meet one of three alternative tests: (1) the “asset test”, (2) the “endowment test,” or (3) the “support test.”^[24]
Summary: What Contributions Are Subject to the 50% Limitation Rule?	The income tax deduction allowable in any one tax year for the total aggregate gifts made to public charities, private operating foundations, and certain private nonoperating foundations is limited to 50% of the your contribution base (defined above).^[25] Note that your total contributions for this purpose includes other charitable contributions that are separately subject to the 20% and 30% limitations. Therefore, your charitable deduction will be limited to 50% of your contribution base in all events.
Summary: What Contributions Are Subject to the 30% Limitation Rule?	The income tax deduction allowable in any one tax year for the total aggregate gifts made to “semi-public” charities, most private nonoperating foundations, and contributions “for the use of” a charity is limited to 30% of the your contribution base.^[26] Further, gifts of capital gain property to public charities are likewise subject to the 30% limitation.^[27] Another special rule imposes a 30% limitation on gifts to a public charity of a remainder interest in trust, where the donor or anyone else has a power to appoint the remainder interest to a charity other than a public charity.^[28]
What Are 50% Charities?	Organizations described in IRC §170(b)(1)(A) are “50% charities.” These include certain— (a) Churches.^[29] (b) Schools.^[30] (c) Hospitals.^[31] (d) Governmental Units.^[32]
	(e) Publicly Supported Organizations.^[33] This very important class of charitable organization includes organizations that normally receive a substantial part of its support from the general public or a governmental unit. Typical examples are museums, libraries, organizations providing facilities for the performing arts, the Red Cross, etc.
	(f) Operating Private Foundations.^[34] (g) Two Types of Nonoperating Private Foundations:^[35] Private Distributing Foundations,^[36] Private Foundations Maintaining a Common Fund.^[37] (h) Private Foundations that Qualify Under IRC §509(a)(2) (meeting the “one-third support test”) or Under IRC §509(a)(3) (qualifying as supporting organizations).^[38]
What Are 30% Charities?	30% charities are charitable organizations that are not “50% charities.” The deduction allowed an individual donor who makes a contribution to a “30% charity” is limited to 30% of the donor’s contribution base. If the contribution is other than cash, other limits may further reduce the size of the deduction.
If a Contribution Exceeds The Contribution Base Percentage Limitation, May the Deduction Be Carried Over to Future Years?	If the donor’s contributions exceed the relevant percentage limitation (50%, 30% or 20% of the contribution base), the excess can be carried over for five years.^[39] (Again, IRC §170(b)(1)(F) defines “contribution base” as “adjusted gross income (computed without regard to any net operating loss carryback to the taxable year under section 172).”)
How Are the Limitations Computed When Gifts to More than One Type of Charity Are Made During the Year?	As you can imagine, if gifts are made to more than one type (50%, 30% and/or 20%) charities during the year, things can get more involved. The IRC sets up an ordering scheme, under which contributions to public charities are considered first. Therefore, if a taxpayer has made both 50% and 30% contributions during the year, the 30% deductions may not exceed the amount of the 50% limitation remaining after taking into account the contributions made to public charities during the year.^[40] 20% contributions are considered last of all.^[41]
What is the Practical Effect of the Ordering Rules?	Taking the 50% gifts into account first (instead of last) makes it harder to utilize the 30% and 20% gifts. For example, if the 50% gifts made up 30% of the contribution base, then if there were any 30% gifts, they would not be deductible in the year made.
How Do the 50%, 30% and 20% Limits Interact With the 5 Year Carryforward Period?	The 50%, 30% and 20% limits are separate but inclusive limitations. The 30% and 20% limits are not in addition to the 50% limit. Where the limitations are exceeded and the excess is carried over, subsequent gifts are taken into account first when applying the 50% limit. The limitations in succeeding years are applied in the following order— (1) current gifts of 50% property; (2) carryover gifts of 50% property (oldest first); (3) current gifts of 30% property; (4) carryover gifts of 30% property (oldest first); (5) current gifts of 20% property; and (6) carryover gifts of 20% property (oldest first).^[42]
Can a Donor Elect to Have the 50% Ceiling Apply to Gift to a 30% Public Charity?	A donor may elect to have the 50% limit apply, instead of the 30% ceiling, in the case of a gift of appreciated property to a 30% public charity.^[43] However, if this election is made, the 170(e) reduction rules operate to reduce the contribution for deduction purposes by 100% of the long-term capital gain attributable to the gift.^[44] The trade off is that the charitable deduction for the reduced amount is increased from 30% to 50% of the taxpayer donor’s contribution base.
Are There Special Rules that Limit Deductions For Property Other Than Cash?	If property other than cash is donated, there are a number of special rules and limitations that can reduce the size of the income tax deduction. IRC §170(b)(1)(C) and §170(e) contains a number of special reduction rules, for which there are, however, a number of exceptions.
What Special Limits Apply to the Contribution of Appreciated Long Term Capital Gain Property to a 50% Charity?	IRC §170(b)(1)(C) limits the deduction for contributions of long term capital gain property to 50% charities to no more than 30% of the donor’s contribution base.
What Special Limits Apply to the Contribution of Appreciated Long Term Capital Gain Property to a 30% Charity?	IRC §170(b)(1)(D) generally limits the deduction for contributions of long term capital gain property to 30% charities to no more than 20% of the donor’s contribution base. Unlike contributions of appreciated property to public charities, in the case of 20% contributions no election available to reduce the amount of the contribution to the donor's basis in the property in return for an increased percentage limitation.
What Special Limits Apply to the Contribution of Appreciated Short Term Capital Gain Property ?	No deduction is allowed for “the amount of gain which would not have been long-term capital gain if the property contributed had been sold by the taxpayer at its fair market value”^[45] (i.e., no deduction is available for the unrealized ordinary income and short term capital gain portion of the gift).
What Special Limits Apply to the Contribution of Unrelated Use Tangible Personal Property?	In the case of a contribution of tangible personal property no deduction is allowed for the amount of unrealized gain that would have been long term capital gain if the property had been sold for its fair market value, “if the use by the donee is unrelated to the purpose or function constituting the basis for its exemption under section 501.”^[46] It stands to reason that in some cases a donor would be better off selling the property, paying the capital gains, and donating (and taking an income tax deduction for) the amount left over. The “related use” rule is discussed in more detail below.
What Special Limits Apply to the Contribution of Long Term Capital Gain Property to a Private Foundation?	In the case of a contribution of long term capital gain property to or for the use of a private foundation (other than a private operating foundation) no deduction is allowed for the amount of gain that would have been long term capital gain if the property had been sold for its fair market value,”^[47] subject to a special exception^[48] for contributions of qualified appreciated stock.
Can a Donor Receive a Deduction for the Built-in Gain Attributable to Appreciated Stock Contributed to a Private Foundation?	IRC §170(e)(5) provides that a taxpayer is entitled to an income tax deduction for the appreciation in long term publicly traded stock (“qualified appreciated stock”) contributed to a private foundation (up to 20% of the taxpayer’s contribution base^[49]). For many years, this was a special rule that was scheduled to expire. It was extended several times, and finally, in the 1998 Taxpayer’s Relief Act, was made permanent.
What is “Qualified Appreciated Stock”?	IRC §170(e)(5)(B) defines “qualified appreciated stock” as stock of a corporation “for which (as of the date of the contribution) market quotations are readily available on an established securities market, and which is capital gain property.”
Is there a Limit on How Much Publicly Traded Stock Can be Contributed to a Private Foundation and Still Have the Built-in Gain Qualify For a Deduction?	IRC §170(e)(5)(C) provides that the donor (together with members of the donor’s family) contributes more than 10% of the value of all outstanding stock in the corporation, the excess will not be considered “qualified appreciated stock.” This is not likely to be an every-day occurrence in the case of stock which is commonly tradable on an established securities market.
Can A Gift of S-Corporation Stock be Made to Charity?	Ordinarily, only individuals and certain qualified trusts can hold stock in an S-Corporation. However, a fairly recent amendment to IRC §1361(c)(6) now permits certain tax exempt organizations, including charities exempt from tax under §501(c)(3) to hold stock in an S-Corporation.
If S-Corporation Stock is Contributed to Charity, How Much of the Value is Treated Capital Gain Property?	Recall that in the case of property that would produce ordinary income (as opposed to capital gain) if sold, the value for income tax deduction purposes at its cost basis.^[50] The ceiling on deductibility is 50%/30% of AGI,^[51] depending on the nature of the donee. If the property is an S-Corporation, a look-through rule is applied under §170(e)(1), flush language: For purposes of applying this paragraph in the case of a charitable contribution of stock in an S corporation, rules similar to the rules of section 751 shall apply in determining whether gain on such stock would have been long-term capital gain if such stock were sold by the taxpayer.
If a Charity Owns S-Corporation Stock, is the Charity Taxed on the Income of the Corporation?	An interest held by a Charity in an S-Corporation is treated as an unrelated business, and hence, the income from the stock is taxable to the Charity. Under IRC §512(e)(1)(A): (e) Special rules applicable to S corporations. (1) In general.
	If an organization described in section 1361(c)(6) holds stock in an S corporation— (A) such interest shall be treated as an interest in an unrelated trade or business; and (B) notwithstanding any other provision of this part— (i) all items of income, loss, or deduction taken into account under section 1366(a), and (ii) any gain or loss on the disposition of the stock in the S corporation shall be taken into account in computing the unrelated business taxable income of such organization.
How Are Gifts of Tangible Personal Property ^[52] Made?	As a general rule, ownership to most items of tangible personal property is transferred simply by delivery of possession coupled with intent to make a gift. A deed is not required to transfer tangible personal property. However, a deed can be used to transfer ownership without delivery, and could prove useful in substantiating the gift for tax purposes. Of course, some items of tangible personal property are titled — automobiles, for example — and in that case, legal title must be transferred in writing, even if the property is delivered, under whatever special procedures are applicable to the item in question.
Must a Gift of Tangible Personal Property Be Notarized?	Prior to 1993, Texas Business and Commerce Code §24.013 required that a gift of tangible personal property must have been acknowledged (notarized) in order to be effective, unless the property was actually delivered by the donor into the donee’s possession. Although acknowledgment is no longer legally required, it is still advisable for income and gift tax purposes, because it establishes the date of transfer.
Can One Spouse Make a Gift of Community Property to Charity Without the Consent of the Other Spouse?	If the gift is made by a married person, there is a presumption that the gift is of community property. If the gift is of community property (or separate property that is jointly owned by a husband and wife), then both spouses should sign the deed. Technically, consent may not be necessary if the item of community property is subject to the “sole management and control” of the donor spouse, but this is a matter that may be difficult to determine, and even then, there are other legal principles (e.g., “fraud on the spouse”) that could void the gift, if it is a large gift.
What is the Limitation on Cash Gifts?	As such, a gift of cash is income tax deductible up to 50% (30% in the case of a nonoperating private foundation) of the donor’s adjusted gross income (AGI),^[53] with a five-year carryover of an excess.^[54]
What Special Rules Apply to a Gift of Related Use Tangible Personal Property?	A gift of tangible personal property held long term is fully deductible, up to the applicable deductibility ceiling, at its present fair market value, with no reduction for appreciation, only if the property is related* to the exempt function of the charitable recipient*.^[55] The ceiling on deductibility, in this case, is 30% of AGI,^[56] with a five-year carryover.^[57] As was the case with gifts of appreciated securities or real estate, held long term, an election can be made to increase the ceiling from 30% to 50% in the case of a gift to a 50% charity.

	What Special Rules Apply to a Gift of Unrelated Use Tangible Personal Property?	Different rules apply if the gift is unrelated to the exempt function. For example, a gift of a piano or furniture that can be used by the church would probably be considered a gift of related use property, but a gift of a pearl necklace or a statue of Zeus would not. In the case of a gift of unrelated use tangible personal property held long term, the value of the gift for deduction purposes is reduced by the appreciation.^[58] However, the deductibility ceiling is increased to 50% of AGI in the case of a gift to a 50% charity,^[59] with a five-year carryover.^[60] It stands to reason that in some cases a donor would be better off selling the unrelated-use tangible personal property, paying the capital gains, and donating (and taking an income tax deduction for) the amount left over.
	What Special Rules Apply to a Gift of Tangible Personal Property, Real Estate Or Securities Held Short-Term?	A gift of tangible personal property, real estate or securities held short-term is valued for income tax deduction purposes at its cost basis.^[61] The ceiling on deductibility is 50%/30% of AGI,^[62] depending on the nature of the donee.
	What Special Rules Apply to Gifts Of Ordinary Income Properties?	In the case of property that would produce ordinary income (as opposed to capital gain) if sold, the value for income tax deduction purposes at its cost basis.^[63] The ceiling on deductibility is 50%/30% of AGI,^[64] depending on the nature of the donee. Special rules apply to corporate gifts of inventory.
	Must a Gift To Charity Be Specially Substantiated if the Gift is Over $250?	In order to claim a charitable deduction of $250 or more, it is necessary for the donor to have a contemporaneous written acknowledgment (receipt) from the charity, issued by the date the taxpayer’s return is filed, or, if earlier, the due date (including extensions) of the taxpayer’s return.^[65] A canceled check alone is insufficient.^[66] The receipt will meet the “acknowledgment” requirements only if it includes the following information:
	What Must the Receipt For an Over $250 Gift Show?	(i) The amount of cash and a description (but not value) of any property other than cash contributed. (ii) Whether the donee organization provided any goods or services in consideration, in whole or in part, for any property described in clause (i). (iii) A description and good faith estimate of the value of any goods or services referred to in clause (ii) or, if such goods or services consist solely of intangible religious benefits,^[67] a statement to that effect.^[68] The receipt should also state the date of the gift.^[69]
What is Sufficient as a Written Contemporaneous Acknowledge-ment?		The statute states that the written acknowledgment will be considered contemporaneous if obtained by the taxpayer on or before the earlier of— (i) the date on which the taxpayer files a return for the taxable year in which the contribution was made, or (ii) the due date (including extensions) for filing such return.^[70]
	When Might the Substantiation Rules Not Apply?	The substantiation rules will not apply to a contribution if the donee organization files a return, on such form and in accordance with such regulations as the Secretary may prescribe, which includes the information described above with respect to the contribution. However, at the time of this writing there were no such regulations. Therefore, you should assume, and it cannot be overemphasized, that unless the written acknowledgment is received by you prior to the earlier of the filing of your tax return or its due date, the gift will not be deductible!
	Must a Gift To Charity Be Specially Substantiated For Gifts of Property Other than Cash Equal to $500 or Less?	In addition, separate and apart from the requirements just enumerated, in the case of a gift of property other than cash worth less than $500, the donor must have a receipt from the charity and a reliable written record containing certain information about the property specified in the regulations.^[71]
	What Must the Receipt For an Over $500 Gift Show?	The receipt must show: (i) The name and address of the donee. (ii) The date and location of the contribution. (iii) A description of the property in detail reasonably sufficient under the circumstances. Although the fair market value of the property is one of the circumstances to be taken into account in determining the amount of detail to be included on the receipt, such value need not be stated on the receipt.
		A letter or other written communication from the donee acknowledging receipt of the contribution, showing the date of the contribution, and containing the required description of the property contributed constitutes a receipt for purposes of this paragraph. A receipt is not required if the contribution is made in circumstances where it is impractical to obtain a receipt (e.g., by depositing property at a charity's unattended drop site). In such cases, however, the taxpayer shall maintain reliable written records with respect to each item of donated property that include the information required by paragraph (b)(2)(ii) of this section.^[72]
	Does the Required Information Track IRS Form 8283?	The information required is much the same as that called for in IRS Form 8283, which is required to be filed by donors who deduct more than $500 for gifts of property other than cash.
	Are There Additional Record Keeping Requirements?	In addition to the receipt, the regulations, quoted below, require that the donor’s records must show: (ii) Content of records. The written records described in paragraph (b)(1) of this section shall include the following information and such information shall be stated in the taxpayers income tax return if required by the return form or its instructions: (A) The name and address of the donee organization to which the contribution was made. (B) The date and location of the contribution.
		(C) A description of the property in detail reasonable under the circumstances (including the value of the property), and, in the case of securities, the name of the issuer, the type of security, and whether or not such security is regularly traded on a stock exchange or in an over-the-counter market. (D) The fair market value of the property at the time the contribution was made, the method utilized in determining the fair market value, and, if the valuation was determined by appraisal, a copy of the signed report of the appraiser.
		(E) In the case of property to which section 170(e) applies [i.e., the deduction is reduced because the property is contributed to a private foundation, is unrelated use tangible personal property, or a sale of the property would not qualify for long term capital gain treatment if appreciated], the cost or other basis, adjusted as provided by section 1016, the reduction by reason of section 170(e)(1) in the amount of the charitable contribution otherwise taken into account, and the manner in which such reduction was determined. A taxpayer who elects under paragraph (d)(2) of §1.170A-8 to apply section 170(e)(1) to contributions and carryovers of 30 percent capital gain property shall maintain a written record indicating the years for which the election was made and showing the contributions in the current year and carryovers from preceding years to which it applies. For the definition of the term “30-percent capital gain property,” see paragraph (d)(3) of §1.170A-8.
		(F) If less than the entire interest in the property is contributed during the taxable year, the total amount claimed as a deduction for the taxable year due to the contribution of the property, and the amount claimed as a deduction in any prior year or years for contributions of other interests in such property, the name and address of each organization to which any such contribution was made, the place where any such property which is tangible property is located or kept, and the name of any person, other than the organization to which the property giving rise to the deduction was contributed, having actual possession of the property.
		(G) The terms of any agreement or understanding entered into by or on behalf of the taxpayer which relates to the use, sale, or other disposition of the property contributed, including for example, the terms of any agreement or understanding which --
		(1) Restricts temporarily or permanently the donee's right to use or dispose of the donated property,
		(2) Reserves to, or confers upon, anyone (other than the donee organization or an organization participating with the donee organization in cooperative fundraising) any right to the income from the donated property or to the possession of the property, including the right to vote donated securities, to acquire the property by purchase or otherwise, or to designate the person having such income, possession, or right to acquire, or (3) Earmarks donated property for a particular use.^[73]
	Must a Gift To Charity Be Specially Substantiated if the Gift is Other Than Cash & is Over $500?	If a donor claims a charitable deduction for a contribution of property other than cash having a value of more than $500, the donor must complete Part 1 of Form 8283 and, in addition to the information required to be provided for gifts of property worth $500 or less, must maintain additional records showing the manner in which the property was acquired and the cost or other basis, if held for less than 12 months.^[74]
	Is There an Appraisal Requirement in the Case of a Gift To Charity of Property Other Than Cash Worth Over $5000?	If a donor claims a deduction in excess of $5000 for a donation of property other than money or publicly traded securities to a charitable organization, the income tax charitable deduction will not be allowed unless the donor complies with the detailed appraisal requirements of Treas. Reg. §1.170A-13(c). These requirements are reported on Form 8283 and too lengthy and detailed to be described here.

Must the Donee Charity File a Special Return If Donated Property is Sold Within Two Years of Receipt?

If the donee charitable organization disposes of property given by a donor for whom the qualified appraisal rules (described in Treas. Reg. §1.170A-13(c)) applied, the donee organization must file a Form 8282 with the IRS and must give a copy to the donor.^[75] The form is due no later than 125 days after the property has been disposed of.^[76] There are some exceptions for property worth less than $500.^[77]

Does the IRC Require a Charitable Organization to Maintain Books and Records?

IRC §6001 requires charitable organizations, as well as all other taxpayers, to maintain books and records adequate to file returns and comply with IRS regulations and sufficient to substantiate all reported information.^[78] Although the regulations may only require that tax records be maintained for three years,^[79] an exempt organization should keep its records indefinitely, in case the IRS attempts to revoke the organization’s exempt status retroactively to the date it was formed.

^[1]All references herein to the "IRC" are to the Internal Revenue Code of 1986, as amended, unless otherwise indicated.

^[2]IRC §501(c)(3).

^[3]IRC §170(b)(1)(C)and (D).

^[4]IRC §170(d)(1). 170(b)(1)(C)(ii) and (D)(ii).

^[5] IRC §68(b)(1).

^[6]§170(b)(1)(A)(i)-(vi) describes the following:

(i) a church or a convention or association of churches,

(ii) an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on,

(iii) an organization the principal purpose or functions of which are the providing of medical or hospital care or medical education or medical research, if the organization is a hospital, or if the organization is a medical research organization directly engaged in the continuous active conduct of medical research in conjunction with a hospital, and during the calendar year in which the contribution is made such organization is committed to spend such contributions for such research before January 1 of the fifth calendar year which begins after the date such contribution is made,

(iv) an organization which normally receives a substantial part of its support (exclusive of income received in the exercise or performance by such organization of its charitable, educational, or other purpose or function constituting the basis for its exemption under section 501(a)) from the United States or any State or political subdivision thereof or from direct or indirect contributions from the general public, and which is organized and operated exclusively to receive, hold, invest, and administer property and to make expenditures to or for the benefit of a college or university which is an organization referred to in clause (ii) of this subparagraph and which is an agency or instrumentality of a State or political subdivision thereof, or which is owned or operated by a State or political subdivision thereof or by an agency or instrumentality of one or more States or political subdivisions,

(v) a governmental unit referred to in subsection (c)(1),

(vi) an organization referred to in subsection (c)(2) [i.e., a charitable organization] which normally receives a substantial part of its support (exclusive of income received in the exercise or performance by such organization of its charitable, educational, or other purpose or function constituting the basis for its exemption under section 501(a)) from a governmental unit referred to in subsection (c)(1) or from direct or indirect contributions from the general public,

^[7]IRC §4947(a)(1).

^[8]IRC §4947(a)(2).

^[9]IRC §4940.

^[10]IRC §4941.

^[11]IRC §4942.

^[12]IRC §4943.

^[13]IRC §4944.

^[14]IRC §4945.

^[15]IRC §507(a).

^[16]IRC §170(b)(1)(A).

^[17]IRC §§6033(c) and 6034.

^[18]Rev. Rul. 85-160, 1985-2 C.B. 162.

^[19]IRC §4942(g)(1)(A)(ii).

^[20]IRC §4945(h) and §4945(d)(4).

^[21]IRC §4942.

^[22]IRC §170(b)(1)(A)(vii) and §4942(a)(1).

^[23]IRC §4940(d).

^[24]Treas. Reg. §53.4942(b)-1(a)(1).

^[25]IRC §170(b)(1)(A).

^[26]IRC §170(b)(1)(B).

^[27]IRC §170(b)(1)(C).

^[28]Rev. Rul. 79-368, 1979-2 C.B. 109.

^[29]IRC §170(b)(1)(A)(i).

^[30]IRC §170(b)(1)(A)(ii).

^[31]IRC §170(b)(1)(A)(iii).

^[32]IRC §170(b)(1)(A)(v).

^[33]IRC §170(b)(1)(A)(vi). IRC §170(b)(1)(A)(vi) and Treas. Reg. § 1.170A-9(e)(2).

^[34]IRC §170(b)(1)(A)(vii) and 170(b)(1)(E)(i). IRC §4942(j)(3).

^[35]IRC §170(b)(1)(A)(vii).

^[36]IRC §170(b)(1)(E)(ii).

^[37]IRC §170(b)(1)(E)(iii).

^[38]IRC §170(b)(1)(A)(viii).

^[39]IRC §170(b)(1)(B) and (C)(ii).

^[40]170(b)(1)(C)(iii)IRC §170(b)(1)(C)(iii).

^[41]IRC §170(b)(1)(D).

^[42]IRC §170(b)(1)(C)(ii), (D)(ii), and (d)(1).

^[43]IRC §170(b)(1)(C)(iii).

^[44]IRC §170(e)(1)(B).

^[45]IRC §170(e)(1)(A).

^[46]IRC §170(e)(1)(B)(i).

^[47]IRC §170(e)(1)(B)(ii).

^[48]IRC §170(e)(5).

^[49]IRC §170(b)(1)(D).

^[50]IRC §170(e)(1)(A).

^[51]IRC §170(b)(1)(A).

^[52]Personal property is property other than real estate (for the most part). There are two types of personal property: tangible and intangible personal property. Tangible personal property is something tangible, that can be picked up and moved and has intrinsic value in and of itself, such as works of art, antiques, furniture, pianos, etc.. Intangible personal property would include stocks, bonds, bank accounts, and the like.

^[53]IRC §170(b)(1)(A); Treas. Reg. §1.170A-8(b).

^[54]IRC §170(b)(1)(A); Treas. Reg. §1.170A-10(b).

^[55]IRC §170(e)(1)(B)(i). Treas. Reg. §1.170A-4.

^[56]IRC §170(b)(1)(C)(i).

^[57]IRC §170(b)(1)(C)(ii).

^[58]IRC §170(e)(1)(B)(i).

^[59]IRC §170(b)(1)(A).

^[60]IRC §170(d)(1).

^[61]IRC §170(e)(1)(A).

^[62]IRC §170(b)(1)(A).

^[63]IRC §170(e)(1)(A).

^[64]IRC §170(b)(1)(A).

^[65]IRC §170(f)(8)(A).

^[66]S Rprt No. 103-36 (PL 103-66) p. 222.

^[67]For this purpose, the term 'intangible religious benefit' means any intangible religious benefit provided by an organization organized exclusively for religious purposes and which generally is not sold in a commercial transaction outside the donative context.

^[68]IRC §170(f)(8)(B).

^[69]Treas. Reg. §1.170A-13(a)(1)(ii).

^[70]IRC §170(f)(8)(C).

^[71]Treas. Reg. §1.170A-13(b)(1)(ii).

^[72]Treas. Reg. §1.170A-13(b)(1).

^[73] Treas. Reg. §1.170A-13(b)(2).

^[74]Treas. Reg. §1.170A-13(b)(3).

^[75]IRC §6050L. See also 1984 Blue Book at 502-511.

^[76]Treas. Reg. §1.6050L-1(f), (d)(1).

^[77]Treas. Reg. §1.6050L-1(a)(2), (3).

^[78]Treas. Reg. §1.6001-1.

^[79]Treas. Reg. §31.6001-1(e)(2).

What are the Principal Disadvantages of Being Classified as a Private Foundation?

How Are Gifts of Tangible Personal Property[52] Made?

What Special Rules Apply to a Gift of Unrelated Use Tangible Personal Property?

Must the Donee Charity File a Special Return If Donated Property is Sold Within Two Years of Receipt?

How Are Gifts of Tangible Personal Property ^[52] Made?